Question on: JAMB Economics - 2003

Here's the breakdown: * **Inferior Good:** An inferior good is a good for which demand decreases as consumer income increases, and vice-versa. * **Decreased Real Income:** If real income decreases, consumers have less money to spend. * **Impact on Demand:** For an inferior good, a decrease in income leads to an *increase* in demand. This is because consumers, with less income, will switch to cheaper alternatives (inferior goods). An increase in demand is represented graphically by an outward shift of the demand curve. * **Options Analysis:** * A lower equilibrium price: is not a direct result of change in income. * a change in quantity demanded: this would be a movement *along* the demand curve, not a shift of