“Bigger, better” Burgers, Not Downsized

Answer the following questions to check your understanding of the story.

How do economists classify the two types of burgers described in the news clip?

“Bigger, better” burgers are _________ goods, and smaller burgers are _________ goods.

a) normal; inferior

b) normal; normal

c) inferior; normal

d) inferior; inferior

Wrong! - How do changes in demand as income increases help you distinguish between normal and inferior goods?

Good Job! - As income increases, this subset of Americans buys more “bigger, better burgers” and fewer smaller burgers. “Bigger, better burgers” are normal goods and smaller burgers are inferior goods.

Why do the low prices of smaller burgers no longer attract customers?

Smaller burgers no longer attract customers because__________.

a) for an inferior good, quantity demanded decreases as price falls

b) as Americans “climb the ladder”, demand for smaller burgers decrease

c) in the market for burgers, factors like taste and income drive sales, not price

d) low prices of smaller burgers suggest they have low nutritional value

Wrong! - Why would a lower price not increase sales?

Well Done! - Lower prices for smaller burgers are unable to attract customers because an increase in income has decreased their demand.

Does the news clip suggest that the burger market violates the law of demand?

a) A change in income rather than a change in price changes the quantity demanded.

b) The law of demand holds for normal goods but not inferior goods.

c) The assumption of ceteris paribus is violated when income changes.

d) The news clip describes a change in demand.

Wrong! - Does a change in income change the quantity demanded or violate the ceteris paribus assumption? Isn’t the demand curve for an inferior good downward sloping?

That's Right! - The news clip describes a change in demand as income changes. The demand curve remains downward sloping, so the law of demand still holds.

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