Question

The average 15-year-old purchases 100song downloads and buys 20 cheese pizzas in a typical year. If cheese pizzas are inferior goods, would the average 15-year-old be indifferent between receiving a$\backslash (50$gift certificate at a local music store and$\backslash )50$in cash? Explain.

Short answer

The average 15 -year-old be feel indifferent upon receiving a $\$50$gift certificate at a local music store and $\$50$in cash. This is so as pizza and songs both are inferior goods.

Step-by-step solution

Describing inferior goods: 

The type of good whose demand declines when income develops is well known as an inferior good. Their demand is contrary to the consumer's income.

When it comes to inferior goods, it means that the consumer has the ability to buy regardless of their quality. Even if some inferior goods have low quality the consumer needs to purchase them.

Pizza and songs are inferior good 

Here, the average-year-old will be indifferent upon receiving agift certificate at a local music store andin cash because Pizza and songs both are inferior goods. Also, the average-year-old does not have a stable income or no income so he does not have the ability to purchase it.

• In the given case, he/she is asked to explain the importance of inferior goods, an average of 15 years old who downloaded 100,100 songs and bought 2020 cheese pizza in a typical year, and he/she received it. Even if you are indifferent, $ 50 gift certificate and $ 50

• Cash. Inferior goods are the types of goods whose demand decreases as income increases. Demand for inferior goods is in contrast to consumer income. Inferior goods mean that you have the opportunity to buy something of poor quality, regardless of quality.In this case, the average 15 has little or no income. Both pizza and songs are poor products, but you may be indifferent to receiving a $ 50 gift certificate at a local music store and receiving $ 50 in cash.
• The purpose of the task is to explain the case of inferior goods and their importance using the given example. The situation presented is on average 15 years old, buying 100 song downloads in a normal year and buying cheese pizza in 2020.
• Inferior goods are an economic term used to describe goods whose demand decreases as people's income increases.
• As consumers improve their income and economy, these products will become less popular as consumers begin to buy more expensive alternatives instead.
• When talking about inferior goods in this particular case, it is important to note that the term inferior goods refer to affordable goods rather than quality.
• However, some inferior goods may be of poor quality. Consumer behaviour is typically what drives demand for subpart products.
• Demand for inferior goods is usually driven primarily by low-income earners, in this case, children.

Given that both pizza and songs are inferior, the average 15-year-old doesn't care whether he receives a $ 50 gift certificate at a local music store or $ 50 in cash.