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View FREE Lessons! Definition of an Inferior Good:An inferior good is a good for which the demand is inversely related to income, which means that if a person’s income increases, the demand for an inferior good will decrease. Detailed Explanation:When your income decreases, do you purchase more of a particular good or service? Perhaps you would buy second-hand clothes at a thrift store, or, if you needed a car, you would buy a used car rather than a new car. Maybe you would take a bus, instead of hailing a taxi. Second-hand clothes and used cars are examples of inferior goods. Using a bus is an example of an inferior service if you would prefer to use a taxi. Note that “inferior” does not refer to the quality of the good. Instead, economists use inferior to describe the relationship between the demand for a good and a change in a consumer’s income. Inferior goods have demands that are inversely related to income. As income increases, the demand for a product decreases, so the demand curve shifts to the left. A drop in income would result in an increase in the demand for the good or service, and the demand curve for the inferior good would shift to the right. Inferior goods usually have more appealing substitutes, which consumers will switch to following a rise in income. For example, clothes from a thrift store and new clothes are substitutes. As income increases, consumers purchase new clothes and less from thrift stores, as shown below in a leftward shift from D1 to D2 of the demand for second-hand clothes from a thrift store.  Here's a fun video explaining normal and inferior goods.Dig Deeper With These Free Lessons:Demand – The Consumer’s Perspective What happens to an inferior good when income decreases?An inferior good is one whose demand drops when people's incomes rise. When incomes are low or the economy contracts, inferior goods become a more affordable substitute for a more expensive good. Inferior goods are the opposite of normal goods, whose demand increases even when incomes increase.
What happens to the equilibrium price and quantity of inferior goods when incomes fall?It shifts inward when a consumer's income decreases. An inferior good is one whose consumption decreases when income increases and rises when income falls. The demand curve for an inferior good shifts out when income decreases and shifts in when income increases.
When there is an inferior good a decrease in consumer income will result in the?If a good is an inferior good, increases in income will result in a decreasein demand while decreases in income will increase demand.
What happens when consumer income decreases?When income decreases, the demand for normal goods decreases. The relationship between income and inferior goods is an inverse one. When income rises, the demand for inferior goods decreases, whereas when income decreases, the demand for inferior goods increases.
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If good a is considered an inferior good, what will happen to good a when incomes fall?
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