Suppose the demand curves for goods A,B,and C have the following functional forms,where Q denotes quantity demanded,P denotes price,and M denotes income: QA = 120 - 3.5PA - 6PB + 14M QB = 100 - 2PB + 3PC + 1.1M QC = 1500 - 0.5PC - 300M.
Based on these demand curves,which of the following goods are known to be inferior goods?

Question

Quizplus · Accepted Answer

A good is considered inferior if its demand decreases as income increases. In the case of good C, its demand curve has a negative coefficient for M, which indicates that as income increases, the quantity demanded for good C decreases. Therefore, good C is an inferior good. Goods A and B have positive coefficients for M, which means that as income increases, the quantity demanded for these goods also increases. Therefore, they are not inferior goods.

Suppose the Demand Curves for Goods A,B,and C Have the Following