What occurs when consumer income increases for inferior goods?

What occurs when consumer income increases for inferior goods?

• A. Demand increases
• B. Demand remains unchanged
• C. Demand decreases
• D. Supply increases

Answer: (C)

When consumer income increases, the demand for inferior goods decreases. Inferior goods are those whose demand falls when consumer incomes rise because consumers tend to buy higher-quality alternatives or superior goods as their purchasing power improves. For example, if a consumer has a higher income, they may choose to buy less of items like instant noodles or generic brands—goods that are considered inferior—because they can now afford to purchase more expensive and higher-quality substitutes. This shift in consumer preference leads to a decrease in demand for those inferior goods when income increases. Consequently, the relationship between consumer income and demand for inferior goods is inversely related, emphasizing the concept that the classification of goods as "inferior" is based entirely on consumer behavior relative to changes in income.

When consumer income increases, the demand for inferior goods decreases. Inferior goods are those whose demand falls when consumer incomes rise because consumers tend to buy higher-quality alternatives or superior goods as their purchasing power improves.

For example, if a consumer has a higher income, they may choose to buy less of items like instant noodles or generic brands—goods that are considered inferior—because they can now afford to purchase more expensive and higher-quality substitutes. This shift in consumer preference leads to a decrease in demand for those inferior goods when income increases. Consequently, the relationship between consumer income and demand for inferior goods is inversely related, emphasizing the concept that the classification of goods as "inferior" is based entirely on consumer behavior relative to changes in income.