If a consumer is given a $10 gift certificate good for items in store X, and all items in store X are inferior goods, then the consumer desires to consume:
A) more goods in store X.
B) fewer goods in store X.
C) the same amount of goods in store X.
D) None of the statements is correct.

Question

Quizplus · Accepted Answer

Inferior goods are those whose demand decreases when consumer income increases. Therefore, if all items in store X are inferior goods, the consumer would desire to consume fewer goods in store X even though they have a $10 gift certificate. Thus, the correct answer is B, fewer goods in store X.

If a Consumer Is Given a $10 Gift Certificate Good