Suppose you manage a corner grocery store.If peanut butter is an inferior good,what do you suppose would happen to the price and quantity sold of peanut butter as incomes fell during a recession?
A)The price would increase and the quantity would decrease.
B)The price and quantity would both increase.
C)The price and quantity would both decrease.
D)The price would decrease and the quantity would increase.

Question

Quizplus · Accepted Answer

Inferior goods are those for which demand increases as consumer income decreases. During a recession, when incomes fall, consumers are more likely to buy more of these goods because they are cheaper alternatives to more expensive options. Therefore, both the price and quantity sold of peanut butter would likely increase due to higher demand.

Suppose You Manage a Corner Grocery Store