If a demand curve slopes upward, then
A) the good is inferior.
B) the income effect reinforces the substitution effect.
C) the income effect overwhelms the substitution effect.
D) both a and b
E) both a and c

Question

Quizplus · Accepted Answer

Typically, demand curves slope downward, indicating that as price decreases, quantity demanded increases. However, in the case of a demand curve that slopes upward, this unusual behavior can be attributed to the good being an inferior good (where demand increases as income decreases) and situations where the income effect (the change in consumption resulting from a change in real income) overwhelms the substitution effect (the change in consumption patterns due to a change in relative prices), leading to more of the good being purchased even as its price increases.

If a Demand Curve Slopes Upward, Then