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

Question

Quizplus · Accepted Answer

When consumers' incomes decrease, demand for inferior goods (which are typically purchased more as incomes fall) increases. This can lead to an increase in price due to higher demand, and in response, suppliers may increase the quantity supplied to meet this higher demand.

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