An indication that the economy is in recession, e.g., a rise in the number of used clothing stores for babies, suggests that
A)used clothes for babies are a necessity
B)used clothes for babies are an inferior good
C)used clothes for babies are a normal good
D)new clothes for babies are a luxury
E)used clothes for babies have price-elastic demand

Question

Quizplus · Accepted Answer

A rise in the number of used clothing stores for babies suggests that consumers are looking for more affordable options, which implies that used clothes for babies are an inferior good. As the economy declines and people have less disposable income, they may be more willing to purchase lower-quality, second-hand clothing instead of buying new, high-quality goods.

An Indication That the Economy Is in Recession, E