PRC-3 · Chapter 10 · Question 25 of 70
During an economic boom, average salaries rise by 30%. Consequently, sales of generic, unbranded powdered milk plummet as families switch to premium fresh milk. How is the powdered milk classified?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Inferior good
Explanation
Inferior goods are those for which demand falls when consumer income rises, because consumers switch to better-quality substitutes.
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