Suppose the supply curve for breakfast cereals is upward sloping.Suppose also that as average household income increases we observe a fall in the price of breakfast cereal.We can conclude that breakfast cereal is a(n)
A)necessity good.
B)inferior good.
C)normal good.
D)substitute good.
E)luxury good.

Question

Quizplus · Accepted Answer

According to the given information, as household income increases, the price of breakfast cereal falls. This implies that demand for breakfast cereal decreases as income increases, making it an inferior good. The upward sloping supply curve indicates that as the price of breakfast cereal decreases, producers are willing to supply less of it.

Suppose the Supply Curve for Breakfast Cereals Is Upward Sloping