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A product whose demand falls when income rises is called an inferior good. If consumer income rises, what happens to the demand curve for an inferior good?
AIt shifts to the right
BIt shifts to the left
CIt stays exactly where it was
DIt becomes perfectly vertical
Answer & Solution
Correct answer: B. It shifts to the left
1. By definition, an inferior good's demand moves opposite to income.
2. As income rises, consumers buy less of the inferior good at every price.
3. A curve showing a lower quantity at every price has shifted to the left.
4. This is the opposite direction from a normal good, whose demand curve shifts right when income rises.
_Source: OpenStax Principles of Macroeconomics for AP Courses (CC BY 4.0), Ch 3 "Demand and Supply", section 3.2 | Shifts in Demand and Supply for Goods and Services_
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