Which of the following statements is true?
A) No good can be inferior at all levels of income.
B) The income elasticity of demand is negative for normal goods.
C) It is possible for a good to be inferior at all income levels.
D) It is possible for all of the goods a consumer buys to be inferior.

Question

Quizplus · Accepted Answer

A good cannot be inferior at all levels of income because as income increases, the demand for inferior goods decreases and consumers switch to higher quality substitute goods. Therefore, it is not possible for a good to be inferior at all income levels. Choice B is false because the income elasticity of demand is positive for normal goods. Choice C is also false because as income increases, the demand for inferior goods decreases and consumers switch to higher quality substitute goods. Finally, choice D is unlikely because consumers generally buy some normal goods as well as inferior goods, so it is unlikely for all the goods a consumer buys to be inferior.

Which of the Following Statements Is True