An inferior good is ordinary:
A) always.
B) if the substitution effect exceeds the income effect.
C) if the income effect exceeds the substitution effect.
D) never.

Question

Quizplus · Accepted Answer

An inferior good is considered ordinary if the substitution effect, which is the change in consumption due to a change in relative prices, exceeds the income effect, which is the change in consumption due to a change in purchasing power.

An Inferior Good Is Ordinary