If you're confused, think of a clearer analogy: hamburgers and ketchup are complements; hamburgers and hotdogs are substitutes. Here the supply shift reduces the price of Hops, increasing the quantity of Hops consumed. This is a change in quantity demanded, NOT a lateral shift in demand with respect to Hops prices. The decline in Hops prices implies movements along the cross-price demands for Tongs and Flumps with respect to Hops price, and lateral shifts in demands with respect to other prices or income.
First, review the definitions. As incomes rise, consumers buy less of an inferior good and more of a normal good. Luxury goods are a subset of normal goods: as incomes rise consumers spend proportionately more of their incomes on a luxury good. Inferior goods have negative income elasticities; normal goods have positive income elasticities; luxury goods have income elasticities greater than one.
A plot of quantity demanded with respect to income is known as an Engel curve. Inferior goods have negatively-sloped Engel curves; normal goods have positively-sloped Engel curves. A change in income implies movements along the Engel curves and shifts of own- and cross-price demand schedules.
- soybeans INFERIOR. High-income people don't consume more food calories than low-income people, so most agricultural commodities qualify as inferior goods. Certain products made from soybeans may be normal or even luxury goods.
- dog food probably NORMAL since pets appear to be normal goods, although a lot of pet food is actually eaten by low-income people.
- children INFERIOR. We're not criticizing kids here. In the US, low-income households have more children than high-income households. Globally, low-income countries have higher birth rates than high-income countries.
- education IT DEPENDS. Where school attendance is mandatory, public schooling is arguably inferior; private schooling is a luxury substitute. College is a luxury good except for very high-income households.
- health care LUXURY. As US incomes have risen over the past 40 years, expenditures on health care have increased more than proportionately. This is a huge crisis, right? Well, no. It just means people prefer to spend a lot of their extra income on getting and staying healthy, and health care can do a lot more for you now than it could 40 years ago. This is not a valid justification for "reforms" that would reduce health expenditures by reducing the quality of care or restricting your access to care.
- TV viewing INFERIOR. This has TV advertisers worried.
- demand for education Effective demand is increased.
- tuition rates increase, assuming the supply of college educations isn't perfectly elastic (horizontal).
- wages College diverts people from low-skill jobs, making low-skill labor scarcer, so McDonalds has to pay higher wages for burger-flippers who never finished hgh school. College increases the supply of job skills, perhaps reducing relative wage rates for skilled vs. unskilled...
- LR income distributions ...but increasing labor productivity and wages overall.
- consumers spend more on sugar, have less to spend on other goods.
- the dental health of US citizens maybe improved slightly from lower sugar consumption
- the market for artificial sweeteners gets a big boost, since artificial sweeteners can compete against high-priced sugar a lot more effectively than low-price sugar. Without sugar quotas, some of these artificial sweeteners might never have been developed.
- US cotton markets land diverted from cotton to sugar beets; lower cotton supply, more cotton imports.
- US corn markets corn is a big winner, since corn sweeteners can compete very nicely against high-priced US sugar.
- street prices for cocaine Since Columbia can't sell sugar to the US, it's growing something it can sell.
- crime rates Drugs are pretty closely associated with crime right? Next time you're mugged by a dope addict, thank America's sugar beet growers and the US Congressmen they bought.
- net incomes of sugar beet producers A lot lower than they hoped for since artificial sweeteners and corn sweeteners horned in on their markets, so their lobbyists are still in Washington whining for even more government help.