Evan left a job in which he was earning $75,000 a year for one he liked better but pays only $50,000 a year.Around the same time as the job switch,Evan needed to buy a new car.Had he kept his old job he would have bought a new car but instead he was forced to buy a used car.Therefore
A) used cars are normal goods for Evan
B) new cars are inferior goods for Evan
C) the supply curve for new cars shifted to the left
D) new and used cars are complements
E) used cars are inferior goods for Evan

Question

Quizplus · Accepted Answer

Since Evan chose to buy a used car after switching to a job with a lower salary, it suggests that used cars are inferior goods for him. If new cars were normal goods for him, he would have still opted to buy a new car even after switching to a job with a lower salary. Therefore, option E is the best choice.

Evan Left a Job in Which He Was Earning $75,000