Economists have observed that when average incomes increase, purchases of fast food tends to decline.

Based on this information, what can we definitely say about fast food?
Choose 1 answer:
Demand for fast food is upward sloping
There is always an inverse relationship between price and quantity demanded, meaning the demand curve always slopes downward. Also, in this case buyers are responding to a change in income, not price.
Fast food has no substitutes
We cannot say whether fast food and other options are complements or substitutes unless we know how prices are changing for those other goods.
The price of a complement to fast food has risen
It's true that an increase in the price of a complementary good causes demand for the good in question to fall, but this statement is saying that buyers are responding to a change in income.
Fast food is an inferior good
If rising incomes lead consumers to demand less of a good, then that good is considered an inferior good. With higher incomes, people decide to buy better goods.
Fast food is a normal good
Normal goods experience an increase in demand when incomes rise.

Question

Economists have observed that when average incomes increase, purchases of fast food tends to decline.

Based on this information, what can we definitely say about fast food?
Choose 1 answer:
Demand for fast food is upward sloping
There is always an inverse relationship between price and quantity demanded, meaning the demand curve always slopes downward. Also, in this case buyers are responding to a change in income, not price.
Fast food has no substitutes
We cannot say whether fast food and other options are complements or substitutes unless we know how prices are changing for those other goods.
The price of a complement to fast food has risen
It's true that an increase in the price of a complementary good causes demand for the good in question to fall, but this statement is saying that buyers are responding to a change in income.
Fast food is an inferior good
If rising incomes lead consumers to demand less of a good, then that good is considered an inferior good. With higher incomes, people decide to buy better goods.
Fast food is a normal good
Normal goods experience an increase in demand when incomes rise.

Accepted Answer

∻Solution∻ ‖ a ⋮ Income Effect on Demand: The observation that purchases of fast food decline when average incomes increase indicates an income effect on the demand for fast food. ‖ ‖ b ⋮ Inferior Good Characterization: Goods for which demand decreases as consumer income rises are characterized as inferior goods. This is opposed to normal goods, where demand increases with an increase in income. ‖ ‖ c ⋮ Exclusion of Other Factors: The information provided rules out the price of fast food or its substitutes and complements as factors, focusing solely on the relationship between income and demand for fast food. ‖ ∻Answer∻ ⚹ (D) Fast food is an inferior good ⚹ ∻Key Concept∻ ⚹ Inferior Good ⚹ ∻Explanation∻ ⚹ Fast food is classified as an inferior good because the demand for it decreases as consumer incomes increase, which is the defining characteristic of an inferior good.◊What impact does an increase in average incomes have on the demand for fast food, according to the information provided?⍭ Generate me a similar question◊⚹

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