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Fact 9.3.2 Boom Time for "Gently Used" Clothes
Most retailers are blaming the economy for their poor sales, but one store chain that sells used name-brand children's clothes, toys, and furniture is boldly declaring that an economic downturn can actually be a boon for its business. Last year, the company took in $20 million in sales, up 5% from the previous year. Sales are already up 5% this year.
Source: CNN, April 17, 2008
-Refer to Fact 9.3.2. According to the news clip, used clothing is ________ good. If the price of used clothing falls and income remains the same, the quantity of used clothing bought ________.
A)an inferior; decreases
B)an inferior; increases
C)a normal; increases
D)a normal; decreases
E)a substitute; decreases

Question

Quizplus · Accepted Answer

Used clothing is considered an inferior good because its demand increases when income decreases or remains the same, as people look for cheaper alternatives. If the price of used clothing falls, the quantity bought increases, consistent with the law of demand.

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