Asked by Deangelo Johnson on Jun 10, 2024
Verified
As the income of bus riders increased,the wages of bus drivers increased simultaneously.How does this affect the market for bus rides (inferior good) ?
A) The demand curve will shift to the left;the supply curve will shift to the left
B) The demand curve will shift to the left;the supply curve will shift to the right
C) The demand curve will shift to the right;the supply curve will shift to the left
D) The demand curve will shift to the right;the supply curve will shift to the right
Inferior Good
A type of good for which demand decreases when consumer income rises, unlike normal goods, for which the opposite is observed.
Demand Curve
A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at those prices.
Supply Curve
A graphical representation showing the relationship between the quantity of goods that producers are willing to sell and the price of those goods.
- Analyze the impact of income changes on consumption patterns.
- Perceive the strategies for reaching market equilibrium and the repercussions of any deviations from this state.
Verified Answer
SO
SMITH OMOIRAWUAJun 13, 2024
Final Answer :
A
Explanation :
As the income of bus riders increases, they will have a higher willingness and ability to pay for more comfortable modes of transportation, such as cars or taxis, which will result in a decrease in the demand for bus rides. At the same time, the increase in wages of bus drivers will increase the cost of providing bus rides, resulting in a decrease in the supply of bus rides. Therefore, both the demand and supply curves will shift to the left, causing a decrease in the quantity of bus rides demanded and supplied. This demonstrates that bus rides are an inferior good.
Learning Objectives
- Analyze the impact of income changes on consumption patterns.
- Perceive the strategies for reaching market equilibrium and the repercussions of any deviations from this state.