Question 1

The demand for an inferior good decreases with ________ in the consumer's income.


Increase is the correct word because when people's income increases, they start looking for superior goods and hence demand for inferior goods decreases.

Demand of inferior goods depends on the income of the consumer.

Lets understand with an example. 

When money is constricted, travelling by bus becomes more acceptable, but when money is abundant, more rapid and luxury transport is preferred.

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