Question

After getting a raise at work, Jennie now regularly buys steak instead of hamburger. Based on this behavior, we can assume:

Multiple Choice

• steak is a normal good, and hamburger is an inferior good for Jennie.

• steak is an inferior good, and hamburger is a normal good for Jennie.

• steak and hamburger are complementary goods for Jennie.

• steak and hamburger are normal goods for Jennie.

Answer 1

The correct answer is Option A
A normal good is a good whose demand increases along with an increase in income. Whereas an inferior good is a good whose demand will fall with an increase in income. Here Jennie, had a raise at her work, thus her income will be increased. Here after her raise at work, her demand for steak had increased and her demand for hamburger had fallen. Thus the steak is a normal good and the hamburger is an inferior good. A complementary goods which are consumed together. Here these are not a complementary goods