High School

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Zeke buys more cereal when his income falls. For Zeke, cereal is:

A. A normal good
B. An inferior good
C. A luxury good
D. A necessity

Answer :

Final Answer:

Zeke's consumption of cereal is an inferior good.

Explanation:

Zeke's preference for purchasing more cereal when his income falls suggests that cereal is an inferior good for him. An inferior good is a product for which demand increases as consumer income decreases. This phenomenon is often associated with staple items like generic or less expensive brands of cereal.

The reason behind this behavior can be explained by the income effect. When Zeke's income decreases, he may have to cut back on more expensive food items, and as a result, he buys more cereal because it is a cost-effective option. This is a common consumer response when faced with income constraints.

In terms of economic theory, the demand for inferior goods has an inverse relationship with income. As income decreases, demand for inferior goods rises, and vice versa.

In summary, Zeke's increased cereal consumption when his income falls indicates that cereal is an inferior good for him, and this behavior is consistent with economic principles related to inferior goods.

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