During the recession of 2007-2009, despite falling income levels, the fast-food chain Subway experienced increased sales. The increase in demand for Subway sandwiches despite the decline in income indicates that Subway sandwiches are considered

Question

Karley Waters

Business

10 April, 12:13

During the recession of 2007-2009, despite falling income levels, the fast-food chain Subway experienced increased sales. The increase in demand for Subway sandwiches despite the decline in income indicates that Subway sandwiches are considered

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Answers (1)

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Cornelius Harper · Answer 1

Inferior goods

Explanation:

If during the recession, despite falling income levels, the fast-food chain Subway experienced increased sales; then the increase in demand for Subway sandwiches despite the decline in income indicates that Subway sandwiches are considered inferior goods.

Income elasticity is an economic principle which states that 'normal goods have their demand increase when the income of consumers increase while inferior goods are those goods that have their demand increase when income falls'

It suggests that consumers could not afford healthy meals during the recession because of their decrease in income, hence, they had to eat more of affordable Subway sandwiches.