If consumers' incomes increase, the price of an inferior product
A) falls and quantity supplied decreases.
B) rises and quantity supplied increases.
C) rises and quantity demanded decreases.
D) rises and quantity demanded increases.
E) falls and quantity supplied increases.

Question

Quizplus · Accepted Answer

When consumers' incomes increase, demand for inferior goods (goods for which demand decreases as income increases) typically decreases. This decrease in demand leads to a lower equilibrium price and, consequently, a decrease in the quantity supplied as suppliers adjust to the reduced demand.

If Consumers' Incomes Increase, the Price of an Inferior Product