If the price and quantity for an inferior good,Good X,is $8 and 6 units at the original equilibrium,what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant?
A) $10 and 4 units
B) $10 and 8 units
C) $6 and 4 units
D) $6 and 8 units
E) $10 and 2 units

Question

Quizplus · Accepted Answer

Since Good X is an inferior good, an increase in income will lead to a decrease in demand for Good X. As a result, the new equilibrium will have a lower quantity demanded and a lower price. Option C is the only choice that satisfies this condition.

If the Price and Quantity for an Inferior Good,Good X,is