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Q87 (CDS-II/2015) Economy › Basic Concepts & National Income › Demand theory basics Answer Verified

In view of the fact that kerosene is an inferior good in India, what is/are its implication(s)? 1. As households get richer, they consume less kerosene. 2. Over time there is a decline in quality of kerosene. 3. Government needs to stop subsidies on kerosene. Select the correct answer using the code given below.

Result
Your answer: —  Â·  Correct: A
Explanation

In economics, an inferior good is defined by its negative income elasticity of demand. As consumers' incomes rise, their demand for such goods decreases because they can afford superior substitutes [3]. In India, kerosene is considered an inferior good because as households get richer, they transition to cleaner and more efficient energy sources like LPG and electricity, leading to a decline in kerosene consumption [1]. Statement 1 is therefore a direct implication of the definition of an inferior good. Statement 2 is incorrect as the 'inferior' label refers to economic demand patterns relative to income, not a physical degradation of the product's quality over time [2]. Statement 3 is a policy recommendation rather than a direct economic implication of the good's classification; while subsidies are being phased out due to the shift toward LPG, this is a result of energy transition goals rather than the inherent definition of an inferior good [1].

Sources

  1. [2] Microeconomics (NCERT class XII 2025 ed.) > Chapter 2: Theory of Consumer Behaviour > 2.4.3 Normal and Inferior Goods > p. 24
  2. [3] Microeconomics (NCERT class XII 2025 ed.) > Chapter 5: Market Equilibrium > Demand Shift > p. 77
  3. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 9: Subsidies > 9.3 Fuel Subsidies > p. 287
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SIMILAR QUESTIONS

IAS · 2004 · Q22 Relevance score: -2.24

Consider the following statements : 1. The Oil Pool Account of Government of India was dismantled with effect from 1.4.2002. 2. Subsidies on PDS kerosene and domestic LPG are borne by Consolidated Fund of India. 3. An expert committee headed by Dr R. A. Mashelkar to formulate a national auto fuel policy recommended that Bharat State-II Emission Norms should be applied throughout the country by April 1, 2004. Which of the statements given above are correct?

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IAS · 2021 · Q34 Relevance score: -2.65

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CDS-II · 2014 · Q59 Relevance score: -3.51

Which among the following about the Rangarajan Panel Report on poverty estimation (submitted in July, 2014) is/are correct ? 1. The report states that three out of ten people in India are poor 2. The report endorsed the Tendulkar committee suggestion on determining poverty line in India Select the correct answer using the code given below: