The correct answer is: A. a-1, b-2, c-3, d-4
Income elasticity of demand is a measure of how much the demand for a good or service changes in response to a change in income. It is calculated as the percentage change in the quantity demanded divided by the percentage change in income.
Competitive goods are goods that are substitutes for each other. When the price of one competitive good goes up, the demand for the other competitive good will go up.
Cross elasticity of demand is a measure of how much the demand for one good changes in response to a change in the price of another good. It is calculated as the percentage change in the quantity demanded of the first good divided by the percentage change in the price of the second good.
Inferior goods are goods that people demand less of as their income increases.
Superior goods are goods that people demand more of as their income increases.
Complementary goods are goods that are used together. When the price of one complementary good goes up, the demand for the other complementary good will go down.
Here is a brief explanation of each option:
- Option A: a-1, b-2, c-3, d-4. This is the correct answer. Income elasticity of demand is less than unity for inferior goods. Cross elasticity of demand is less than unity for competitive goods. Cross elasticity of demand is less than zero for complementary goods. Income elasticity of demand is less than zero for inferior goods.
- Option B: a-4, b-3, c-1, d-2. This is not the correct answer. Income elasticity of demand is less than unity for inferior goods, not superior goods. Cross elasticity of demand is less than unity for competitive goods, not complementary goods. Cross elasticity of demand is less than zero for complementary goods, not inferior goods.
- Option C: a-3, b-1, c-4, d-2. This is not the correct answer. Income elasticity of demand is less than unity for inferior goods, not superior goods. Cross elasticity of demand is less than unity for competitive goods, not complementary goods. Cross elasticity of demand is less than zero for complementary goods, not inferior goods.
- Option D: a-4, b-1, c-2, d-3. This is not the correct answer. Income elasticity of demand is less than unity for inferior goods, not superior goods. Cross elasticity of demand is less than unity for competitive goods, not complementary goods. Cross elasticity of demand is less than zero for complementary goods, not inferior goods.