Econ.que.onAlchianGeneralizati

If the wage rate increase, this means that people have more income and they earn more than before. Assumption: People will shift to the demand of superior goods ( luxury goods if they have more income; People will shift their demand to inferior goods, low quality goods if they have less income ).


In this case, trains and airplanes are superior goods ( if they are owned privately )because they are high quality transoprtation, so When the wage rate increases, people demand for it will be higher.


However, ( in the 2nd case )


If the trains and airplanes are for public, these are inferior goods such as public transoprtation, so when people's wage rate increases, they will spend less on them.

If