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If the income of a consumer increases and the consumer's demand for a particular good...

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skyler89 | Student, College Sophomore | Honors

Posted October 1, 2012 at 3:14 PM via web

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If the income of a consumer increases and the consumer's demand for a particular good decreases, what kind of good is it?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted October 1, 2012 at 3:24 PM (Answer #1)

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In this case, we would say that the good is an “inferior good.”

For all normal goods, demand rises as people’s incomes rise.  If I have more money, I am more likely to be able to buy a big TV.  Therefore demand for big TVs rises with income.  This makes sense to us intuitively.  But there are goods for which this is not true.  These are “inferior goods” that people will only buy when they have to.  An example of this might be goods from dollar stores.  When people are doing poorly in financial terms, they buy these goods.  But as soon as they can afford to, they buy better goods.

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