Assume we live in an economy with only two available goods, X and Y. Suppose that...
Assume we live in an economy with only two available goods, X and Y. Suppose that we experience an increase in consumer income. If Y is an inferior good, then what cannot happen from the choices below?
a. decrease the demand for Y.
b. decrease the demand for X.
c. increase the demand for X.
d. make the consumer better off.
Homework Answers
Ans) the correct option is b. decrease the demand for X.
When consumer income rises, the demand for inferior good decreases and demand for normal good increases.
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