If bologna is an inferior good, when average consumer income rises, the demand curve for bologna will _____, all else equal.
A) see a movement upward along the curve
B) remain unchanged
C) decrease
D) increase

Question

Quizplus · Accepted Answer

Inferior goods are those for which demand decreases as consumer income rises, because consumers start buying more preferable substitutes. Therefore, when average consumer income rises, the demand curve for an inferior good like bologna will decrease, not because of a change in price (which would cause a movement along the demand curve) but because of a change in consumer income, which shifts the demand curve.

If Bologna Is an Inferior Good, When Average Consumer Income