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?

A It is a normal good Correct Answer Incorrect Answer
B It has many substitutes Correct Answer Incorrect Answer
C It is a substitute good Correct Answer Incorrect Answer
D It is an inferior good Correct Answer Incorrect Answer

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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