[amp_mcq option1=”Prestige goods” option2=”Inferior goods” option3=”Complementary goods” option4=”Substitute goods” correct=”option2″]<\/p>\n
The correct answer is B. Inferior goods<\/strong>.<\/p>\n Giffen’s paradox is an economic paradox that states that an increase in the price of a good can lead to an increase in demand for that good, even though the good is an inferior good. This can happen when the good is a necessity for the consumer and the consumer has a limited budget. When the price of the good increases, the consumer has less money to spend on other goods, so they may choose to consume more of the inferior good.<\/p>\n Prestige goods are goods that are seen as being of high quality or status. They are often expensive and are purchased by people who want to show off their wealth or social status. When the price of a prestige good increases, the demand for that good will usually decrease, as fewer people will be able to afford it.<\/p>\n Complementary goods are goods that are used together. For example, cars and gasoline are complementary goods. When the price of cars increases, the demand for gasoline will usually decrease, as people will be less likely to buy cars.<\/p>\n Substitute goods are goods that can be used in place of each other. For example, coffee and tea are substitute goods. When the price of coffee increases, the demand for tea will usually increase, as people will switch to drinking tea instead of coffee.<\/p>\n Inferior goods are goods that people consume less of when their income increases. For example, rice is an inferior good in many developing countries. When people’s incomes increase, they tend to eat less rice and more meat.<\/p>\n Giffen’s paradox is a rare phenomenon, but it can occur when an inferior good is a necessity for the consumer and the consumer has a limited budget. When the price of the good increases, the consumer has less money to spend on other goods, so they may choose to consume more of the inferior good.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”Prestige goods” option2=”Inferior goods” option3=”Complementary goods” option4=”Substitute goods” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-58871","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n