INQUIZITIVE Chapter 3 The Market at Work Supply and Demand

INQUIZITIVE Chapter 3: The Market at Work: Supply and Demand | Page(s) 78-79 3.2 What dete Fill in the blanks to complete the statement comparing used cars and new cars. Since used cars are goods compared with new cars, we should expect that as income increases, the demand for used cars should: We should expect an increase in income to torused cas shoudth therhad.new carsareds g0ods. the demand for new cars. decrease normal complementarynferior increase

Solution

Ans:

An inferior good is a good whose demand decreases when consumer income increases.Used cars are inferior goods.

A normal good is any good for which demand increases when consumer income increases.New cars are normal goods.

1) Inferior goods

Used cars are inferior goods, as demand decreases when consumer income increases.

2) decrease

As income increases, demand for used cars should decrease.

3) Normal goods

A normal good is any good for which demand increases when consumer income increases.

4) increase

As income increases, demand for used cars should increase.