Question
As a result of an increase in consumer incomes, the demand for XYZ good has decreased. Based on this information, what can we definitely say about what type of good XYZ is?
Solution
Inferior goods are goods whose demand is reduced with increasing consumer income. Inferior goods are very low-priced goods and are of much lower quality related to other goods. Income growth allows the consumer to change their choices and buy substitutes of superior quality.
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