Understanding Demand and Inferior Goods

The video clarifies misconceptions about inferior goods, using a car market example to illustrate how income changes affect demand. It explains that while a cheap car may be considered an inferior good, more expensive cars are normal goods. The video also discusses how demand curves shift with income changes, emphasizing that these shifts are not always uniform across price points.

What was the main point clarified in the introduction regarding cars as inferior goods?

• All cars are considered inferior goods.

• Only the cheapest car might be considered an inferior good in certain contexts.

• Luxury cars are always inferior goods.

• Midsize sedans are never considered inferior goods.

In the described population, which type of car is owned by the majority?

• The cheapest car

• A midsize sedan

• A luxury car

• Electric cars

What happens to the demand for the cheapest car when income increases?

• Demand remains the same

• Demand decreases

• Demand fluctuates

• Demand increases

How does the demand for luxury cars change with an increase in income?

• It fluctuates

• It increases

• It decreases

• It remains unchanged

What is the effect of income increase on the demand for midsize sedans?

• Demand remains unchanged

• Demand increases

• Demand decreases

• Demand fluctuates

What is indicated by a leftward shift in the demand curve for the cheapest car?

• The car is an inferior good

• The car is a normal good

• The car is a necessity

• The car is a luxury good

What does a rightward shift in the demand curve signify for normal goods?

• Increase in demand

• Fluctuating demand

• No change in demand

• Decrease in demand

What is the relationship between income and demand for normal goods?

• As income increases, demand fluctuates

• As income increases, demand increases

• As income increases, demand decreases

• As income increases, demand remains the same

What question is addressed regarding the shifting of demand curves?

• Whether demand curves always shift perfectly

• Whether demand curves never shift

• Whether demand curves shift only for luxury goods

• Whether demand curves shift only for inferior goods

Can the shape of a demand curve change while it is shifting?

• Only for inferior goods

• Only for luxury goods

• Yes, it can change

• No, it remains the same