Question

Wolverine and Spartan root beer are the best root beers according to the Root Beer Review. There is
also the generic store brand root beer - People's Choice brand- that is also sold where Gertrude
shops. Suppose that there is a recession. Gertrude's employer cuts her hours and, as a result, her
weekly pay declines. What will this do to her demand for generic root beer? Draw a graph of the
generic root beer market and explain what happened and why.

Answer 1

Answer:

Following the concept of inferior and normal goods, Gertrude's demand for generic brand root beer would increase.

Explanation:

During a recession as she has less income available. This typically moves demand away from normal goods (wolverine and spartan) and towards inferior goods (generic brand).