A typical consumer consumes both coffee and donuts. After the consumer's income decreases, the consumer consumes more coffee but fewer donuts than before. For this consumer, coffee is a normal good, but donuts are an inferior good.

Question

Quizplus · Accepted Answer

For this consumer, coffee is an inferior good because consumption increases as income decreases. Donuts are a normal good because consumption decreases as income decreases.

A Typical Consumer Consumes Both Coffee and Donuts