Hamburger is an inferior good.If the price of hamburger increases,
A)the income effect on the demand for hamburger will reinforce the substitution effect
B)the income effect on the supply of hamburger will reinforce the substitution effect
C)the budget line will rotate outward
D)the budget line will shift outwards
E)the income effect on the demand for hamburger will offset,to some degree,the substitution effect

Question

Quizplus · Accepted Answer

The income effect on the demand for hamburger will offset, to some degree, the substitution effect.When the price of hamburger increases, the substitution effect will lead to a decrease in the demand for hamburger. However, the income effect will lead to an increase in the demand for hamburger, as consumers will have less money to spend on other goods and services. The income effect will offset, to some degree, the substitution effect, so the overall effect on the demand for hamburger will be smaller than the substitution effect alone.

Hamburger Is an Inferior Good