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Question
The relationship between income and demand for inferior goods is ______.
Options
direct
inverse
no effect
can be direct and inverse
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Solution
The relationship between income and demand for inferior goods is inverse.
Explanation:
Inferior goods are those goods for which demand falls when income rises, and demand rises when income falls.
Example: If someone’s income increases, they may shift from bus travel (inferior good) to car travel (normal good).
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