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.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
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.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
The price decrease from Rs 2,000 to Rs 1,800 Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ?
If the cross elasticity of demand is -2 ?
The price elasticity of demand is a negative number this means ?
An increase in price all other things unchanged leads to ?
An increase in income should ?
According to the law of diminishing utility ?