Consider a two-good world,with commodities X and Y.If Y is an inferior good,then an increase in consumer income CANNOT:
A) decrease the demand for Y.
B) decrease the demand for X.
C) increase the demand for X.
D) make the consumer better off.

Question

Quizplus · Accepted Answer

If Y is an inferior good, an increase in income would lead to a decrease in its demand. However, an increase in income would lead to an increase in the demand for normal goods such as X. Therefore, options A, C, and D are incorrect. Option B is the only correct answer as an increase in income cannot decrease the demand for X.

Consider a Two-Good World,with Commodities X and Y