Asked by Liliana Navarro on Sep 23, 2024
Verified
If your income goes up by 2% and,in response,the quantity demanded of good x falls by 3%,the good x can be considered
A) An inferior good
B) A normal good
C) A public good
D) A private good
Inferior Good
A type of good whose demand decreases as the consumer's income increases, contrasting with normal goods where demand increases with income.
Income
The financial gain received by an individual or a business, typically measured over a specific time period.
Quantity Demanded
The total amount of a good or service that consumers are willing and able to purchase at a given price within a specific period.
- Distinguish between standard and lower-quality products.
Verified Answer
RK
rovena kalaj3 days ago
Final Answer :
A
Explanation :
Inferior goods are those for which the quantity demanded decreases as income increases, while normal goods are those for which the quantity demanded increases as income increases. Since the income elasticity of demand is negative (-1.5), good x can be considered an inferior good. When income goes up by 2%, the quantity demanded of good x falls by 3%, which implies that the good is sensitive to changes in income levels.
Learning Objectives
- Distinguish between standard and lower-quality products.