Asked by Michaela Trujillo on Jun 29, 2024
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If we observe that when consumers' incomes rise by 10%, the quantity demanded of ice cream increases by 5%, then ice cream is an inferior good.
Inferior Good
A type of good whose demand decreases when consumer income rises, unlike normal goods, for which demand increases with income.
Quantity Demanded
The amount of a product consumers are willing and able to purchase at a given price over a specified time period.
Income
The money received by an individual or business for work done, from investments, or from the sale of goods or services.
- Discriminate between superior and lower-grade products by employing income elasticity of demand analysis.
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Learning Objectives
- Discriminate between superior and lower-grade products by employing income elasticity of demand analysis.
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