[Related to Making the Connection] A student makes the following argument: The c

Question

[Related to Making the Connection] A student makes the following argument: The chapter says that for consumers as a group, Quiznos sandwiches are normal goods and Subway sandwiches are inferior goods. But I like the taste of Subway sandwiches better than I like the taste of Quiznos sandwiches, so for me Quiznos sandwiches are inferior goods and Subway sandwiches are normal goods" This student's reasoning is confused because the classification of goods as normal or inferior depends on the price of substitutes, not personal preferences O A. O B. right on the money because product quality is ultimately a matter of personal tastes. ° C. probably accurate because the majority of taste tests confirm her classification. O D. confused because the classification of a good as normal or inferior depends on the response of demand to a change in income.

Explanation / Answer

Correct Answer:

D

The classification of inferior or normal goods is done on the basis of change in the demand due to change in income. If demand comes down with increase in income, then it is an inferior goods. This classification is not followed by student. Rather, student follows the taste to identify the inferior goods from normal good.

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