Question

Consider the consumer only consumes two goods namely flour and potatoes. Potatoes are an

inferior good. Do you think that flour can also be inferior goods? Give your reviews. If the price

of flour falls, illustrate the impact on the consumption of flour and potatoes using substitution

effect and income effect​

Answer 1

Answer:

A major source of air pollution results from the burning of fossil fuels. Vehicle and factory emissions are common sources of this type of air pollution. The burning of fossil fuels contributes to the formation of smog, a dense layer of particulate matter that hangs like a cloud over many major cities and industrial zones. Air pollution contributes to respiratory problems such as asthma, lung cancer, chronic bronchitis, and other lung ailments. Nitrogen and sulfur oxides in the air contribute to acid rain, which is a form of precipitation with a lower (more acidic) pH than normal. Acid rain harms forests, species that live in water bodies, and degrades outdoor statues, monuments, and buildings.

Explanation:

Answer 2

An inferior good is a type of good whose demand declines when income rises and demand of inferior goods is inversely related to the income of the consumer.

Explanation:

• The consumers are consuming both flour and potatoes.
• Presently both commodities face a downward sloping graph, that is the higher the price the lesser will be the demand and vice versa.
• If the income of consumer rises, then he would be more inclined towards flour, which is a little costly than potato.
• The mindset of the consumer behind this behavior is that now he can afford flour because of his increase in income.
• Therefore, the consumer will switch his flour demand from potato to flour.
• Hence potato, whose demand has fallen due to an increase in income, is the inferior good and flour is the normal good.

To Learn More...

Consider the consumer only consumes two goods namely flour and potatoes. Potatoes are an

inferior good Do you think that flour can also be inferior goods? Give your reviews. If the price

of flour falls, illustrate the impact on the consumption of flour and potatoes using substitution

effect and income effect.

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