If renting videos is an inferior good, demand for this service will rise when consumer income falls.

Question

Quizplus · Accepted Answer

An inferior good is a good that people demand less of when their income rises. When consumer income falls, people tend to have less money to spend on expensive entertainment and prefer renting videos as an affordable option. Therefore, the demand for video rentals will rise when consumer income falls, making it an inferior good.

If Renting Videos Is an Inferior Good, Demand for This