When incomes fall by 20%, quantity demanded of specialty baked goods falls by 50%. Specialty baked goods are:
A) inferior goods.
B) necessities.
C) substitutes for mass-produced bread.
D) luxuries.
E) complements to butter.

Question

Quizplus · Accepted Answer

Specialty baked goods are considered luxuries because the quantity demanded decreases significantly (by 50%) when incomes fall by 20%, indicating they are not essential goods.

When Incomes Fall by 20%, Quantity Demanded of Specialty Baked