Frequent Exam Questions with Answers
Inferior Goods
Chapter 8 ― Question 12
A decline in incomes will
- shift the demand curve for hamburgers to the left
- shift the demand curve for hamburgers to the right
- cause an upward movement along the demand curve for hamburgers
- cause a downward movement along the demand curve for hamburgers
*B. Hamburgers are an inferior good. As incomes decline and many people can no longer afford expensive foodstuffs, more hamburgers will be bought. As income is an exogenous variable, the curve shifts.
Chapter 8 ― Question 14
Many people think that junk food is an inferior good. If consumer incomes increase, what happens to
1) the demand curve for junk food
2) the quantity demanded
3) the equilibrium price
*1) The demand curve shifts to the left. Less junk food is bought at constant prices.
*2) The quantity demanded falls. The new equilibrium is the intersection of the shifted demand curve and the supply curve.
*3) The equilibrium price falls. The new equilibrium is at a lower point than the old one.
For questions of this kind, it is best to sketch the graph.
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