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.

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