We often talk about the difference between "normal" and "inferior" goods in the classroom, a distinction that depends not on product quality, but the effect of changes in income on demand. When income falls, the demand for normal goods decreases, but the demand for inferior goods increases. Typical examples include Kraft dinner (a student staple), used cars and public transit.
A couple of articles lately caught our attention. The first, from the Sep 3rd edition of the Globe and Mail, reports on the increase in sales at McDonald's and Burger King. Things are so good, in a recession, that McDonald's is increasing their dividend and Burger King is being bought out. (Click here for article)
Today an article from Reuters indicates that Jack-in-the-Box is closing 40 stores in Texas and the south-east. The reason given is that high unemployment in those regions has decreased sales. (Click here for article)
We can only conclude that Jack-in-the-Box is normal while McDonald's and Burger King are inferior.
For our money, Five Guys Burgers and Fries is still best.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment