Question

For which of the following goods would you expect the quantity consumers demand to be the most responsive to a rise in price?

1) Inferior goods
2) Normal goods
3) Luxury goods
4) Complementary goods

Answer 1

The quantity consumers demand for normal goods is usually less responsive to a rise in price compared to inferior goods.

Step-by-step explanation:

A product whose demand rises when income rises, and vice versa, is called a normal good. Normal goods are typically goods that people buy more of when their income increases. Examples of normal goods include luxury cars, vacations in Europe, and fine jewelry.

On the other hand, inferior goods are goods whose demand falls when income rises. Inferior goods are typically goods that people buy less of when their income increases, as they can afford more expensive choices that they prefer. Examples of inferior goods include generic brand groceries, used cars, and apartments.

When the price of a normal good rises, the quantity consumers demand is usually less responsive compared to the quantity consumers demand for inferior goods. This is because people are more likely to continue purchasing normal goods even if the price increases, as they prioritize these goods over others when they have more income.