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Choose the correct answer:

If the demand curve for product B shifts to the right as the price of product A declines, then:

1. both A and B are inferior goods.

2. A is a superior-good and B is an inferior good.

3. A is an inferior good and B is a superior-good.

4. A and B are complementary goods.

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Richa Arora
Richa AroraLv10
17 Sep 2020

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Related questions

1. Economists use indifference curves to characterize the preferences of a rational consumer. There are some plausible assumptions that lead to a set of “well-behaved” (i.e., downward-sloping and strictly convex) indifference curves. Which one of the following is NOT among the assumptions?

a. All goods must be economic “goods.”

b. Preferences are complete.

c. Preferences are transitive.

d. All goods are normal goods

2. Given the prices of good X and Y, the (negative of the) slope of the budget constraint (i.e., - PX/PY) measures

a. the amount of good Y the consumer is willing to forgo in order to consume one more unit of good X.

b. the ratio of the consumer's income to the price of the X good.

c. the quantity of the Y good that must be forgone in order to purchase one more unit of the X good.

d. the quantity of the X good that must be forgone in order to purchase one more unit of the Y good.

3. Which of the following statements is incorrect for an inferior good?

a. An inferior good may have an upward-sloping demand curve.

b. The income elasticity of demand for an inferior good is negative.

c. An inferior good is an economic “bad.”

d. All of the above.

21. When the economy suffers a downturn and the incomes of many people decrease, vacationers are more likely to take car trips than to fly. Which of the following provides one possible explanation for this phenomenon? A) Air travel and vacation travel by car are complementary goods. B) Air travel and vacation travel by car are both normal goods. C) Air travel is a normal good and vacation travel by car is an inferior good. D) Air travel is an inferior good and vacation travel by car is a normal good. Use the following to answer questions 22-24. Figure: Demand for DVDs Rental Rental price price DVDs DVDs 0 Quantity (per period) 0 Quantity (per period) Rental price Rental price of DVDs of DVDs 0 Quantity (per period) 0 Quantity (per period)

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