Consider the local market for fast food hamburgers, an inferior good. If more fast food restaurants open, while consumers' incomes increase, the equilibrium price will be _____, and the equilibrium quantity will be _____.

Question

Quizplus · Accepted Answer

The opening of more fast food restaurants increases supply, which tends to lower the price. However, since fast food hamburgers are an inferior good, an increase in consumers' incomes will decrease demand, also leading to a lower price. The effect on quantity is ambiguous because the increase in supply tends to increase quantity, while the decrease in demand tends to decrease quantity.

Consider the Local Market for Fast Food Hamburgers, an Inferior