When Mehdi's income fell by 10%, he completely gave up taking his dress shirts to the local dry cleaner and instead began to press his shirts himself at home. For Mehdi, what kind of good is having his shirts professionally pressed at the dry cleaner?Multiple ChoiceAn inferior goodA normal goodA luxury goodAn elastic good
Question
When Mehdi's income fell by 10%, he completely gave up taking his dress shirts to the local dry cleaner and instead began to press his shirts himself at home. For Mehdi, what kind of good is having his shirts professionally pressed at the dry cleaner?Multiple ChoiceAn inferior goodA normal goodA luxury goodAn elastic good
Solution
The correct answer is A. An inferior good.
Here's why:
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Inferior goods are goods that decrease in demand when consumer income decreases.
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In this case, when Mehdi's income fell by 10%, he stopped using the dry cleaning service and started pressing his shirts at home.
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This indicates that for Mehdi, the dry cleaning service is an inferior good because as his income decreased, his demand for this service also decreased.
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Therefore, the dry cleaning service is an inferior good for Mehdi.
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