Joe's monthly income increases from $1,000 to $2,000. As a result, he decreases the number of his fast food meals from 20 to 5 per month. To Joe, are fast-food meals a normal or an inferior good? What kind of elasticity can tell the answer? Explain
What will be an ideal response?
Fast-food meals are an inferior good to Joe because his income elasticity of demand for fast-food meals is negative: as Joe's income increases, the quantity of fast-food meals he demands decreases.
You might also like to view...
Efficient voting outcomes would assign weights to each vote that are:
A) equal. B) egalitarian. C) higher for the median voter and lower for other voters. D) proportional to the voter's strength of preference.
During Prohibition overdose and accidental poisoning due to alcohol _____ and the variation in the quality of alcohol _______
a. fell; fell b. fell; increased c. increased; fell d. increased; increased
The reforms introduced by Congress in the 1930s led to:
A. the Great Crash. B. relative financial stability for over 70 years. C. a further decline that lasted for 25 years. D. the Great Depression to be worse than it needed to be.
Economic growth depends on many factors including adherence to ____________ rights.
a. contractual b. business c. animal d. immigrant