An increase in the income of bus riders,accompanied by a simultaneous increase in the wages of the bus drivers causes,the price for bus rides(an inferior good)_____________ and the quantity demanded for bus rides ____________.
A)Decreases;decreases
B)Increase;increases
C)Uncertain,Decreases
D)Uncertain,Increases

Question

An increase in the income of bus riders,accompanied by a simultaneous increase in the wages of the bus drivers causes,the price for bus rides(an inferior good)_____________ and the quantity demanded for bus rides ____________.​
A)​Decreases;decreases
B)Increase;increases
C)Uncertain,Decreases
D)​Uncertain,Increases

Quizplus · Accepted Answer

When the income of bus riders increases, the demand for an inferior good (bus rides, in this case) typically decreases because people can afford better alternatives. However, an increase in the wages of bus drivers could lead to an increase in the cost of providing bus services, which might push the price of bus rides up or down depending on how the bus company adjusts (e.g., by increasing efficiency, reducing services, or absorbing costs). Therefore, the price effect is uncertain. The quantity demanded decreases due to the income effect on the demand for an inferior good.

An Increase in the Income of Bus Riders,accompanied by a Simultaneous