question archive Which of the following CANNOT result in a decrease in the equilibrium quantity sold of an inferior good? a) An increase in the price of a substitute for the good
Which of the following CANNOT result in a decrease in the equilibrium quantity sold of an inferior good? a) An increase in the price of a substitute for the good
Subject:EconomicsPrice:2.86 Bought4
Which of the following CANNOT result in a decrease in the equilibrium quantity sold of an inferior good?
a) An increase in the price of a substitute for the good.
b) An increase in consumer incomes.
c) An increase in wages paid to workers who produce the good.
d) An increase in the price of a complement for the good.
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- ?a) An increase in the price of a substitute for the good.
Step-by-step explanation
With an increase in income, the consumer will usually buy more of a good. But with an increase in income, a person will buy less of a good if it happens to be an inferior good for him, as he will use better or higher alternatives instead of the inferior good as his income increases. As a consequence, the income effect can be either positive or negative. In the case of regular products, the income effect is positive.
