Asked by Arvind Sethi on Jul 27, 2024
Verified
In the figure given below that shows the demand for baby formula,if baby formula is an inferior good,then an increase in consumer income is likely to cause which of the following changes?
A) A shift in the demand curve from D1 to D2
B) A movement along the demand curve D1 from point a to point b
C) A shift in the demand curve from D2 to D1
D) A movement along the demand curve D2 from point d to point c
E) A movement from point b on the demand curve D1 to point c on the demand curve D2
Inferior Good
A type of good for which demand decreases when consumer income rises, in contrast to normal goods, where demand increases with rising income.
Consumer Income
The total amount of income earned by consumers in an economy, including wages, salaries, benefits, and other income sources, influencing their buying power.
Demand Curve
A graph that shows the relationship between the price of a good and the quantity demanded by consumers at various prices.
- Differentiate between standard and lower-quality goods and their reactions to fluctuations in income.
- Perceive the implications of consumer preference evolution and demographic alterations on demand dynamics.
Verified Answer
ND
Nessim DerkaJul 31, 2024
Final Answer :
C
Explanation :
If baby formula is an inferior good, an increase in consumer income will cause a decrease in demand. This means the demand curve will shift to the left from D2 to D1. Therefore, the best choice is C.
Learning Objectives
- Differentiate between standard and lower-quality goods and their reactions to fluctuations in income.
- Perceive the implications of consumer preference evolution and demographic alterations on demand dynamics.