A government report in Nigeria showed that as incomes rose during an economic boom, demand for locally-produced cassava flour decreased while demand for imported rice increased. Which statement best explains this pattern?

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Question

A government report in Nigeria showed that as incomes rose during an economic boom, demand for locally-produced cassava flour decreased while demand for imported rice increased. Which statement best explains this pattern?

Accepted Answer

Cassava flour is an inferior good and imported rice is a normal good — Award 1 mark for correctly identifying that cassava flour has negative YED (inferior good) as demand fell when income rose, while imported rice has positive YED (normal good) as demand rose with income. A is incorrect — it does not explain why demand for cassava fell. C is incorrect — imported rice demand increased with income. D is incorrect — it reverses the correct classification.

Answer

Imported rice is an inferior good and cassava flour is a normal good

Answer

Cassava flour is an inferior good and imported rice is a normal good

Answer

Both goods are inferior goods

Answer

Both goods are normal goods with different price elasticities

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