Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Demand increases
B
Demand decreases
C
Demand remains unchanged
D
Demand fluctuates unpredictably
Understanding the Answer
Let's break down why this is correct
Answer
When people’s income falls, they often look for cheaper alternatives to keep their budget balanced. Inferior goods are items that become more attractive when money is tight because they cost less than higher‑quality substitutes. Thus, a drop in consumer income usually shifts the demand curve for inferior goods to the right, meaning more of that good is purchased. For example, if a family’s earnings drop, they might buy more instant noodles instead of fresh pasta, increasing the demand for the cheaper option. This relationship shows that inferior goods move in the opposite direction of normal goods when income changes.
Detailed Explanation
When people have less money, they look for cheaper options. Other options are incorrect because Some think less money means buying less overall; The idea that income has no effect on demand is wrong.
Key Concepts
Demand for inferior goods
Income effect
Consumer behavior
Topic
Demand and Supply Basics
Difficulty
medium level question
Cognitive Level
understand
Practice Similar Questions
Test your understanding with related questions
1
Question 1How does an increase in consumer income typically affect the market demand for luxury goods?
easyEconomics
Practice
2
Question 2How does an increase in consumer income typically affect the demand curve for normal goods, and what is the underlying reason for this shift?
hardEconomics
Practice
3
Question 3How does the price elasticity of demand affect total revenue when the price of a product decreases?
easyEconomics
Practice
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