An inferior good is
A)any good of low quality
B)one that consumers buy less of as the price rises
C)one that consumers buy less of as their income rises
D)one that has few substitutes
E)any good made with inexpensive labor

Question

Quizplus · Accepted Answer

An inferior good is a type of good for which demand decreases as the level of income or real income increases. This is because as consumers' incomes rise, they can afford to purchase more expensive, higher quality goods or substitute goods. Examples of inferior goods include ramen noodles or used clothing. Choice A and E are incorrect because low quality and inexpensive labor are not necessarily indicative of inferior goods. Choice B is incorrect because goods for which demand decreases as the price increases are called normal goods. Choice D is incorrect because the presence or absence of substitutes is not a defining characteristic of inferior goods.

An Inferior Good Is