A good is inferior for a consumer if
A) it is never included in his or her consumption bundle.
B) its consumption rises when income rises.
C) its consumption falls when income rises.
D) some minimal level of the good must be consumed to assure the consumer's survival.
E) the assumption of "more is always preferred to less" holds.

Question

Quizplus · Accepted Answer

A good is said to be inferior for a consumer when its consumption falls as his/her income increases. This is because, as the consumer becomes wealthier, they have the ability to demand better goods and services, which they perceive to be of higher quality or value than the inferior good they used to consume before. Thus, the income effect leads to a decrease in consumption of inferior goods.

A Good Is Inferior for a Consumer If