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How does customers' income affect the demand curve with inferior goods?

a) Shifts the demand curve to the left
b) Shifts the demand curve to the right
c) Causes movement along the demand curve
d) No effect on the demand curve

User Terryl
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1 Answer

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Final answer:

A higher level of income shifts the demand curve for inferior goods to the left, as consumers opt for more expensive substitutes and reduce their demand for these lower-priced goods.

Step-by-step explanation:

When analyzing how a customer's income affects the demand curve for inferior goods, it is important to understand that an increase in income typically leads to a shift in the demand curve to the left. This is because, as income rises, consumers are more likely to shift their consumption towards more expensive substitutes, reducing the demand for inferior goods. In contrast, for normal goods, increases in income lead to a shift in the demand curve to the right due to the positive income elasticity of demand.

User Foiseworth
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