normal good or an inferior good

Use the following information to work Problems 19and 20. Boom Time For “Gently Used” Clothes
Most retailers are blaming the economy for their poor sales, but one store chain that sells used name brand children’s clothes, toys, and furniture is boldly declaring that an economic downturn can actually be a boon for its business. Last year, the company took in $20 million in sales, up 5% from the previous year. Sales are already up 5% this year. Source: CNN, April 17, 2008
1. A. According to the news clip, is used clothing a normal good or an inferior good?
b. If the price of used clothing falls and income remains the same, explain how the quantity of used clothing bought changes.
c. If the price of used clothing falls and income remains the same, describe the substitution effect and the income effect that occur.
2. a. Use a graph to illustrate a family’s indifference curves for used clothing and other goods and services.
b. In your graph in part (a), draw two budget lines to show the effect of a fall in income on the quantity of used clothing purchased.

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