Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P x . Assume that P = $8, I = 200, and P x = $10.
-An inferior good or service is any good or service for which an increase in income causes a decrease in demand.

Question

Quizplus · Accepted Answer

An inferior good is a good for which demand decreases as income increases. In the given equation for the demand for noodles, the coefficient of income (I) is positive (0.2), indicating that noodles are a normal good, not an inferior good.

Scenario 5.1 The Demand for Noodles Is Given by the Following Equation