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HomeHomework HelpeconomicsExample of an Inferior Good

Example of an Inferior Good

An inferior good is a type of good whose demand increases when consumer incomes fall, and decreases when incomes rise. This is contrary to normal goods, where demand increases with rising incomes.

beginner
1 hour
Economics
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Overview

Inferior goods are an important concept in economics, representing products whose demand increases when consumer incomes fall. This behavior contrasts with normal goods, where demand rises with increased income. Understanding inferior goods helps us analyze consumer behavior and market dynamics, esp...

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Key Terms

Inferior Good
A good whose demand increases as consumer income decreases.

Example: Instant noodles are often considered an inferior good.

Normal Good
A good whose demand increases as consumer income increases.

Example: Luxury cars are normal goods.

Demand
The quantity of a good that consumers are willing and able to purchase at various prices.

Example: The demand for ice cream increases in summer.

Consumer Behavior
The study of how individuals make decisions to spend their resources.

Example: Consumer behavior changes during economic downturns.

Income Effect
The change in demand for a good resulting from a change in consumer income.

Example: When income falls, demand for inferior goods rises.

Market Trends
Patterns or tendencies in consumer behavior and market conditions.

Example: The trend towards online shopping has increased during the pandemic.

Related Topics

Normal Goods
Goods that see increased demand as consumer income rises.
beginner
Substitute Goods
Goods that can replace each other in consumption.
intermediate
Consumer Choice Theory
The study of how consumers make choices based on preferences and budget.
intermediate
Market Demand
The total demand for a good or service in a market.
intermediate

Key Concepts

inferior goodsdemandconsumer behaviorincome effect