📚 Learning Guide
Demand and Supply Basics
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How does a decrease in consumer income typically affect the demand for inferior goods?

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Learning Path

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Choose 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

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