Which of the following is most likely an inferior good?
A)Rolex watches.
B)Nike running shoes.
C)Generic canned food.

Question

Quizplus · Accepted Answer

Generic canned food is most likely an inferior good as income elasticity of demand for such items is negative. This means as income increases, people tend to substitute generic canned food with higher quality/local brands. Rolex watches and Nike running shoes are luxury goods, demand for which increases with an increase in income, therefore they are not likely to be inferior goods.

Which of the Following Is Most Likely an Inferior Good