How does an increase in income affect the demand for an inferior good? Demand increases. Demand decreases. Demand remains the same. The effect on demand cannot be determined.
Question
How does an increase in income affect the demand for an inferior good? Demand increases. Demand decreases. Demand remains the same. The effect on demand cannot be determined.
Solution
An increase in income typically leads to a decrease in the demand for an inferior good. This is because as income increases, consumers often upgrade to superior or normal goods, reducing their consumption of inferior goods.
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