quiz: assignment 2 (chapter 3)\nguavo graduates from university and his income increases by $50,000 a year…

quiz: assignment 2 (chapter 3)\nguavo graduates from university and his income increases by $50,000 a year. nothing else changes.\nguavo decreases the quantity of hot dogs and potato chips that he buys and increases the quantity of coffee that he buys.\nhow can we categorize guavos purchases?\nfor guavo,\na. hot dogs and potato chips have become complements\nb. hot dogs and coffee have become substitutes\nc. coffee and potato chips are normal goods\nd. hot dogs and potato chips are inferior goods

quiz: assignment 2 (chapter 3)\nguavo graduates from university and his income increases by $50,000 a year. nothing else changes.\nguavo decreases the quantity of hot dogs and potato chips that he buys and increases the quantity of coffee that he buys.\nhow can we categorize guavos purchases?\nfor guavo,\na. hot dogs and potato chips have become complements\nb. hot dogs and coffee have become substitutes\nc. coffee and potato chips are normal goods\nd. hot dogs and potato chips are inferior goods

Answer

Brief Explanations:

In economics, inferior goods are those for which demand decreases when income increases. Since Gustavo's income increased and he decreased the quantity of hot - dogs and potato chips he buys, they are inferior goods. Complementary goods are used together, and there is no indication of that relationship here. Substitute goods replace each other, and no such relationship is shown. Normal goods have an increase in demand with an increase in income, which is not the case for hot - dogs and potato chips here.

Answer:

D. hot dogs and potato chips are inferior goods