- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics (1)
- Reading 12. Topics in Demand and Supply Analysis
- Subject 3. Substitution Effect, Income Effect, Normal and Inferior Goods
CFA Practice Question
The following figure shows Larry's indifference map and budget lines for ham and pork. Which of the following statements is TRUE?
A. Pork is an inferior good.
B. Ham is an inferior good.
C. Neither pork nor ham is an inferior good.
Explanation: As income grows, the consumption of ham actually drops.
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