Question

In 2009, the worst recession in 80 years hit the United States, generally reducing household incomes. Despite this, profits and sales for certain enterprises such as McDonald's and Dollar General actually increased during this time. What is the most likely conclusion about the products sold by these stores?

Answer 1

Answer:

These stores sell inferior goods and services.

Explanation:

An inferior good or service is a good or service whose demand decreases as the income of their consumers increases, i.e. if the consumers are earning more money, they will consume less of them.

On the other hand, when their consumers' income decreases, their demand increases.

Both McDonald's and Dollar General are business that sell cheap goods and services, so when the financial crisis decrease American households' incomes, they more people purchased their goods and services.

Answer 2

Answer:

They are inferior goods.

Explanation:

Inferior goods would undergo an increase in demand as income falls, which fits the scenario described in the question for these firms.