When an economy is in a recession, individuals taking a vacation are more likely to take car trips over airplane trips. The most reasonable explanation is ___________________________.

Air travel and car travel are complementary goods.

Air travel is an inferior good and car travel is a normal good.

Air travel and car travel are both normal goods.

Air travel is a normal good and car travel is an inferior good.

1 answer

The most reasonable explanation is Air travel is an inferior good and car travel is a normal good.

In this context, during a recession, individuals tend to cut back on spending and may opt for more affordable travel options, which can be interpreted as choosing car trips (a normal good) over more expensive air travel (an inferior good). This suggests that as income decreases, individuals prefer the relatively cheaper option of driving over flying.