Scenario 5-1
Suppose that when the average college student's income is $10,000 per year,the annual quantity demanded of Patty's Pizza is 50 and the annual quantity demanded of Sue's Subs is 80.Suppose that when the price of Patty's Pizza increases from $8 to $10 per pie,the quantity demanded of Sue's Subs increases from 80 to 100.Suppose also that when the average student's income increases to $12,000 per year,the annual quantity demanded of Patty's Pizza increases from 50 to 60.
-Refer to Scenario 5-1.What can you deduce about the type of good Patty's Pizza is and about the relationship between Patty's Pizza and Sue's Subs?
A)Patty's Pizza is a normal good and Patty's Pizza and Sue's Subs are substitutes.
B)Patty's Pizza is a normal good and Patty's Pizza and Sue's Subs are complements.
C)Patty's Pizza is an inferior good and Patty's Pizza and Sue's Subs are substitutes.
D)Patty's Pizza is an inferior good and Patty's Pizza and Sue's Subs are complements.

Question

Quizplus · Accepted Answer

The fact that the quantity demanded of Patty's Pizza increases when the average student's income increases suggests that it is a normal good. Additionally, the fact that the quantity demanded of Sue's Subs increases when the price of Patty's Pizza increases suggests that they are substitutes.

Scenario 5-1 Suppose That When the Average College Student's Income Is $10,000