If Jell-O is an inferior good, what happens to the demand for Jell-O when consumer incomes increase?

• A. Jell-O becomes a normal good.
• B. The demand for Jell-O remains unchanged.
• C. The demand for Jell-O increases.
• D. The demand for Jell-O decreases.

Answer: (D)

Verified step by step guidance

1. Understand the definition of an inferior good: An inferior good is a type of good for which demand decreases as consumer incomes increase, and demand increases as consumer incomes decrease.
2. Recall the income effect on demand: For normal goods, demand increases when income increases, but for inferior goods, demand moves in the opposite direction.
3. Apply this concept to Jell-O: Since Jell-O is given as an inferior good, when consumer incomes increase, the demand for Jell-O will decrease.
4. Eliminate incorrect options: The demand does not increase or remain unchanged because that would contradict the definition of an inferior good, and Jell-O does not become a normal good just because incomes rise.
5. Conclude that the correct answer is: The demand for Jell-O decreases when consumer incomes increase, consistent with its classification as an inferior good.