An increase in income should ?
Correct answer: B. shift demand for an inferior product inward
- A. Shift demand for an inferior product outward
- B. shift demand for an inferior product inward
- C. shift supply for an inferior product outward
- D. Shift supply for an inferior product inward
Explanation
Inferior goods have negative income elasticity, so higher income reduces their demand. Their demand curve therefore shifts inward, whereas the supply curve is not directly shifted by this change in consumer income.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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