A Good Is an Inferior Good If the Consumer Buys

question 123

Multiple Choice

A good is an inferior good if the consumer buys less of it when

• A)his income rises.
• B)the price of the good rises.
• C)the price of a substitute good falls.
• D)his income falls.

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Definitions:

Substitutes

Goods or services that can replace each other in usage, offering alternative choices to consumers.

Complements

Goods or services that are used together, where the use of one increases the demand for the other.

Income Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in consumers' income, holding all other factors constant.

Inferior Good

An inferior good is a type of good whose demand decreases when consumer income rises, unlike normal goods, where demand increases with rising consumer income.