Definition
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.
Summary
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, especially during economic downturns when consumers may opt for cheaper alternatives. Examples of inferior goods include items like instant noodles, used cars, and public transportation. These goods become more appealing when consumers face financial constraints. By studying inferior goods, we can gain insights into how economic conditions influence purchasing decisions and the overall market landscape.
Key Takeaways
Definition of Inferior Goods
Inferior goods are those whose demand increases when consumer incomes decrease.
highExamples of Inferior Goods
Common examples include instant noodles, used cars, and public transportation.
mediumImpact of Income on Demand
As income rises, demand for inferior goods typically falls.
highConsumer Behavior
Understanding how consumers react to changes in income helps predict market trends.
medium