Question

The decision by consumers to buy larger quantities of a good at each possible price cannot be caused by:

• A. An increase in the number of buyers
• B. A favourable change in the consumer tastes
• C. Consumer expectation that the prices will be higher in the future
• D. Rising incomes if it is an inferior good

Hint:

For inferior goods, an increase in income usually reduces demand, as consumers prefer higher-quality alternatives.

Answer 1

The Correct Option is D

Phase 1: Comprehending Consumer Behavior.
For an inferior good, an increase in income typically results in a reduced demand, as consumers opt for superior substitutes.

Phase 2: Evaluation of Alternatives.
- (A) Expansion in buyer count: This will augment demand for the good.
- (B) Positive shift in consumer preferences: This will boost demand for the good.
- (C) Consumer anticipation of future price hikes: This may elevate present demand.
- (D) Ascending incomes for an inferior good: This will cause a reduction in demand for said inferior good.

Phase 3: Determination.
Option (D) is correct, as increasing incomes will diminish demand for inferior goods.