If Macaroni and Cheese Is an Inferior Good, Falling Incomes

question 34

Multiple Choice

If macaroni and cheese is an inferior good, falling incomes will tend to:

• A) put upward pressure on its price and quantity.
• B) put downward pressure on its price and quantity.
• C) raise its price but lower its quantity.
• D) lower its price but raise its quantity.

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Definitions:

Metering Strategy

A pricing strategy used by firms to charge consumers for the actual use of a service or product.

Profit Margins

The ratio or percentage of profit generated from sales after deducting costs, indicating the financial health and efficiency of a business.

Robinson-Patman Act

A United States federal law that aims to prevent anticompetitive practices by producers, specifically price discrimination.

Volume Discounts

Reduced prices offered to customers who purchase in large quantities, incentivizing bulk buying.