An inferior good is one for which an increase in income causes a(n) ?
Correct answer: D. decrease in demand
- A. decrease in supply
- B. increase in demand
- C. increase in supply
- D. decrease in demand
Explanation
An inferior good is purchased less when consumers become richer, so higher income causes its demand to decrease. Examples may include low-cost staple foods or second-hand goods, depending on consumer preferences.
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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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