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Question
Microeconomics
Posted 8 months ago
Quiz 1
Google Classroom
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As a result of an increase in consumer incomes, the demand for Meeps has decreased.
Based on this information, what can we definitely say about what type of good a Meep is?
Choose 1 answer:
(A) It is an inferior good.
(B) It is a complement good.
(c) It has many substitutes.
D It is a normal good.
(E) It is a substitute good.
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Answer from Sia
Posted 8 months ago
Solution
a
Definition of Inferior Good: An inferior good is a type of good for which demand decreases as consumer incomes increase
b
Analysis of Demand Change: Given that the demand for Meeps has decreased as a result of an increase in consumer incomes, we can infer that Meeps are an inferior good
Answer
(A) It is an inferior good.
Key Concept
Inferior Good
Explanation
An inferior good is one where demand decreases when consumer incomes rise. Since the demand for Meeps has decreased with an increase in consumer incomes, Meeps are classified as an inferior good.
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