📚 Learning Guide
Inferior and Complementary Goods
medium

Arrange the following concepts related to consumer behavior and market dynamics in the correct sequence: A) Demand for inferior goods increases B) Consumer incomes decrease C) Prices of complementary goods rise D) Demand for complementary goods is affected

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Choose the Best Answer

A

B → A → C → D

B

A → B → D → C

C

B → C → D → A

D

A → D → C → B

Understanding the Answer

Let's break down why this is correct

Answer

To understand the sequence of these concepts, we start with consumer incomes decreasing. When people have less money, they may look for cheaper alternatives, leading to an increase in demand for inferior goods, which are products that people buy more of when their income falls. As demand for inferior goods rises, it can affect the overall market dynamics. If the prices of complementary goods, which are products often used together, rise, this can impact the demand for those complementary goods. Therefore, the correct order is B, A, C, and D, showing how changes in income influence buying behavior and market relationships.

Detailed Explanation

When people's incomes go down, they buy more inferior goods, which are cheaper options. Other options are incorrect because This option suggests that demand for inferior goods comes before incomes decrease; This option puts the price rise of complementary goods before incomes decrease.

Key Concepts

Inferior Goods
Complementary Goods
Consumer Behavior
Topic

Inferior and Complementary Goods

Difficulty

medium level question

Cognitive Level

understand

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