What do you mean by an ‘inferior good’? Give some examples.

Question

Philoid · Accepted Answer

A good having direct relationship with price but inverse relationship with income is called inferior goods. The demand for inferior good increases with increase in price and decreases with rise in income.

At income P, the quantity demanded is Q, when the income increases to P₁ the quantity demanded is reduced to Q₁. When the income decreases to P₂ the quantity demanded is increased to Q₂

At price P, the quantity demanded is Q, when the price increases to P₁ the quantity demanded is increased to Q₁. When the price decreases to P₂ the quantity demanded is decreased to Q₂