If an increase in a consumer's income causes the consumers to decrease her quantity demanded of a good, then the good is ?
Correct answer: D. an inferior good
- A. a substitute good
- B. a normal good
- C. a complementary good
- D. an inferior good
Explanation
An inferior good has a negative income effect: when income rises, consumers buy less of it. Normal goods move in the opposite direction as income increases.
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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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