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A
True
B
False
Understanding the Answer
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Answer
When people earn less, they buy fewer normal goods, so the demand curve for those goods shifts leftward. If a good is inferior, a drop in income can actually make it more attractive, causing its demand curve to shift rightward. The reason is that normal goods are purchased more as income rises, while inferior goods are chosen more when money is tight. Thus, a lower income reduces the quantity demanded of normal goods but can increase the quantity demanded of inferior goods. For example, coffee is a normal good that people buy less of when their income falls, whereas instant noodles are inferior and people buy more of them as income drops.
Detailed Explanation
When people have less money, they buy less of normal goods. Other options are incorrect because The idea that the statement is false comes from thinking the word 'always' is wrong.
Key Concepts
Shifts in Demand Curve
Normal vs. Inferior Goods
Consumer Income
Topic
Shifts in Demand Curve
Difficulty
hard level question
Cognitive Level
understand
Practice Similar Questions
Test your understanding with related questions
1
Question 1If the demand for a product is elastic and the supply curve shifts to the left due to increased production costs, what is the likely outcome for the equilibrium price and quantity?
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2
Question 2Which of the following events would most likely cause a rightward shift in the demand curve for a normal good?
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3
Question 3How does an increase in consumer income typically affect the demand curve for normal goods, and what is the underlying reason for this shift?
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4
Question 4How does a decrease in consumer income typically affect the demand for inferior goods?
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5
Question 5When consumer preferences shift in favor of a product, this results in a(n) __________ of the demand curve for that product.
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6
Question 6Increase in consumer income : outward shift in demand curve :: decrease in consumer preferences : ?
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7
Question 7Arrange the following factors that can shift the demand curve in the correct order of their impact on consumer demand: A) Change in consumer preferences, B) Change in income, C) Change in prices of related goods, D) Change in population size.
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