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Question
Fill in the blanks with appropriate alternatives given in the bracket.
If the price of the inferior goods falls, the demand for them will ________.
Options
1.increase
2.decrease
3.remain constant
4.become zero
Solution
If the price of the inferior goods falls, the demand for them will decrease.
Explanation:
In case of inferior goods, when the prices fall, the quantity demanded also falls due to negative income effect as there is a rise in the preferences of superior quality goods by the consumers.
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