Income Effects on Inferior and Normal Goods

Steps:

• Identify bus journeys as inferior in Singapore: demand falls with rising income, shifting curve left.
• Identify bus journeys as normal in Tanzania: demand rises with rising income, shifting curve right.
• Apply income increase to both countries simultaneously.
• Conclude shifts: left for Singapore, right for Tanzania.

Why B is correct:

• Matches Engel's law on income effects—inferior goods have negative income elasticity, normal goods positive.

Why the others are wrong:

• A: Incorrectly shifts Tanzania left, ignoring its normal good status.
• C: Incorrectly shifts Singapore right, treating it as normal.
• D: Incorrectly shifts Singapore right, overlooking its inferior nature.

Final answer: B