If a Producer Knew His Product to Be an Inferior

question 123

Multiple Choice

If a producer knew his product to be an inferior good and he also knew average household income was falling, he might

• A) close down, because inferior goods are the first to be eliminated from household budgets when income falls.
• B) keep his output the same.
• C) increase output because the demand for his product would rise.
• D) cut output immediately because the demand for his product would surely fall.
• E) decrease output because the demand for his product would rise.

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Definitions:

Population Mean

The mean of every value in a given population.

Population Variance

The average of the squared differences from the Mean, describing the variation of the entire population.

Normally Distributed

Describes a bell-shaped frequency distribution that is symmetrical about the mean, indicating that data near the mean are more frequent in occurrence than data far from the mean.

Sample Size

The number of observations or data points collected in a study or used to represent a larger population.