Homework answers / question archive / MacDonald business organization produces a good (called Y) that is a normal good

MacDonald business organization produces a good (called Y) that is a normal good

Economics

Share With

MacDonald business organization produces a good (called Y) that is a normal good. Its competitor, ABC INC., makes a substitute good that it markets under the name "X." Good X is an inferior good. (A) How will the demand for good Y change if consumer incomes increase? (Provide graphs.) Hint: Draw the original values for the demand curve and then show how an increase in income will affect demand. Label the curves and points. (B) How will the demand for Good X change if consumer incomes increase Hint: Again draw the original curve and show how the relevant curve will be shifted. Label accordingly. (C) How will the demand for good Y change if the price of good X decreases? Hint: Use separate discussion for good Y and good X (graphs are useful as well). (D) Is good X a lower-quality product than good Y? Explain.