Bullseye is a “big box” retail outlet that sells gift certificates for the purchase of an...
Bullseye is a “big box” retail outlet that sells gift certificates for the purchase of an inferior good. A likely result is that Bullseye will sell:
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a smaller quantity of the inferior good than if customers decide to give cash gifts.
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None of the options. Selling the gift certificates has no effect on sales of the inferior good.
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a greater quantity of the inferior good than before it sells the gift certificates.
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a greater quantity of the inferior good than if customers decide to give cash gifts.
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a smaller quantity of the inferior good than before it sells the gift certificates.
Homework Answers
The answer is: A greater quantity of the inferior good than if customers decide to give cash gifts.
If Bullseye sells greater quantity of inferior good before it sells gift certificates of cash. Since demand of inferior goods decrease as income of people increase, it is best to sell inferior goods first as much as possible before more cash comes in the hands of people through cash gift cards
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