Match List I with List II.

LIST I Nature of Goods		LIST II Demand Elasticities
(A)	Inferior goods	I.	Positive cross price elasticity of demand (EXY > 0)
(B)	Substitute goods	II.	Greater than unitary income elasticity of demand. (EI > 1
(C)	Complementary goods	III.	Negative income elasticity of demand (EI < 0)
(D)	Luxury goods	IV.	Negative cross price elasticity of demands, (EXY < 0)

Choose the correct answer from the options given below: 

The correct answer is A - III, B - I, C - IV, D - II.

Important Points Inferior goods - 

• Inferior goods are a type of good for which demand tends to decrease as consumer incomes rise and increase as consumer incomes fall.
• This is reflected in the concept of negative income elasticity of demand (Elasticity of Income, EI < 0).
• The negative income elasticity indicates that as consumers' incomes increase, which are likely to shift their consumption towards higher-quality or more desirable goods, leading to a decrease in demand for the inferior good. 

Substitute goods - 

• Substitute goods are products that can be used in place of each other, meaning that satisfy similar needs or desires.
• When the price of one substitute good increases, the demand for the other substitute tends to increase.
• This relationship is reflected in the concept of positive cross-price elasticity of demand (EXY > 0).
• Positive cross-price elasticity means that an increase in the price of one good leads to an increase in the quantity demanded of the other good. 

Complementary goods - 

• Complementary goods are products that are typically used together, so an increase in the price of one complementary good tends to lead to a decrease in the demand for the other, and vice versa.
• This is reflected in the concept of negative cross-price elasticity of demand (EXY < 0).

Luxury goods - 

• Luxury goods typically have an income elasticity of demand (EI) greater than 1.
• This means that as consumer incomes rise, the demand for luxury goods increases at a proportionally higher rate.
• When people's incomes go up, they tend to spend a larger percentage of their income on luxury items.
• Conversely, if incomes fall, the demand for luxury goods tends to decrease at a higher rate.
•  For luxury goods, this sensitivity is high, hence the value of EI > 1.