How Do Inferior Goods Differ from Economic "Bads

question 73

Multiple Choice

How do inferior goods differ from economic "bads"?

• A)The demand for economic "bads" falls at higher levels of income whereas the demand for inferior goods falls at higher prices.
• B)Economic "bads" are commodities for which demand falls as price falls whereas for inferior goods,quantity demanded falls as more is consumed.
• C)Economic "bads" are commodities for which less is preferred to more under all conditions whereas for inferior goods,demand falls only when income increases.
• D)For economic "bads" marginal utility is positive but gradually diminishes whereas for inferior goods,utility is negative from the first unit of consumption.

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Definitions:

Machine-hours

An indicator of the duration for which equipment is utilized in the manufacturing process, commonly employed for distributing manufacturing overhead costs.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating the potential profitability of products.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding non-operating income and expenses.

Variable Expense Ratio

A measurement that indicates the proportion of variable expenses to sales, showing how costs change with sales volume.