Question

A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese. From this information, what we can assume ?

Answer 1

Answer:

Macaroni and cheese is an inferior good.

Explanation:

From the information given in the question, we can assume that macaroni and cheese are considered as an inferior good for this consumer because there is an inverse relationship between the income level of this consumer and the quantity demanded for macaroni and cheese.

If there is 10% increase in the income of an individual then as a result quantity demanded of macaroni and cheese decreases by 15% and the price of this good remains constant. This shows that macaroni and cheese is an inferior good.