Economists define inferior products as:(a) Goods that are defective;(b) Goods with a positive income effect;(c) Goods with a negative income effect;(d) Goods for which PED is greater than one.
Question
Economists define inferior products as:(a) Goods that are defective;(b) Goods with a positive income effect;(c) Goods with a negative income effect;(d) Goods for which PED is greater than one.
Solution
(c) Goods with a negative income effect.
In economics, an inferior good is a type of good whose demand decreases when the consumer's income rises, unlike normal goods, for which the opposite is observed. This negative correlation with income is what economists refer to as the negative income effect.
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