If consumers spend all of their income, it is impossible for all goods to be inferior goods.

Question

Quizplus · Accepted Answer

Inferior goods are those for which demand decreases as income increases. If consumers spend all of their income, it implies that there is a positive demand for goods. If all goods were inferior, an increase in income would lead to a decrease in demand for all goods, contradicting the scenario where consumers spend all their income. Therefore, not all goods can be inferior; there must be some normal goods whose demand increases with income.

If Consumers Spend All of Their Income, It Is Impossible