If a product is an inferior good ?
Correct answer: A. Demand is inversely related to income
- A. Demand is inversely related to income
- B. Demand in inversely related to price
- C. Demand is directly related to price
- D. Demand is inversely related to the price of substitutes
Explanation
For an inferior good, consumers generally buy less of it as their income increases and more as income falls. This gives an inverse relationship between income and demand, unlike the ordinary price-demand relationship.
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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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