PRC-3 · Chapter 10 · Question 36 of 70
A massive increase in national wages allows families to stop buying cheap, low-quality bread and start buying premium bakery goods. What kind of good is the low-quality bread?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) An inferior good
Explanation
An inferior good is one where demand falls (negative income effect) as consumer income rises, because consumers substitute it with higher-quality alternatives.
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