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) normal good.
B) luxury good.
C) inferior good.
D) substitute good.
E) necessity good.

Question

Quizplus · Accepted Answer

When average household income increases and the price of breakfast cereal falls, it suggests that the demand for breakfast cereal decreases as income rises, indicating that breakfast cereal is an inferior good.

Suppose the Supply Curve for Breakfast Cereals Is Upward Sloping