As opposed to demand for “normal goods,” which goes up as income increases, demand for inferior goods goes down as income increases. Consumers of inferior goods “trade up” to higher priced goods as soon as they can afford it. Rice, potatoes and instant noodles are other examples of inferior goods.

What is the difference between inferior and normal goods?

Normal goods are goods whose demand will increase as income goes up (positive YED), an example of a normal good is organic food. Inferior goods are the goods whose demand falls down with the rise in consumer’s income.

Is rice an inferior good?

There is no evidence that rice is an inferior good. It may even be appropriate to change a priori expectations for grain consumption in high-income countries.

Which is an example of an inferior goods?

It is defined as those goods the demand for which decreases when the income of the consumer increases. Examples of inferior goods are consumption of breads or cereals and since the income of the consumer increases he moved towards consumption of more nutritious foods and hence demand for low priced product like bread or cereal decreases.

How does affordability affect demand for inferior goods?

The affordability of the goods is a key feature that attracts consumers with low income. The demand for inferior goods is mostly determined by consumer behavior. Due to their affordability, such goods are consumed by consumers with low income. However, when a consumer’s income increases, he or she can afford the more expensive substitutes.

Which is the opposite side of normal goods?

To the opposite side of normal goods are the inferior goods. It is defined as those goods the demand for which decreases when the income of the consumer increases.

When does a good become an inferior good?

This occurs when a good has more costly substitutes that see an increase in demand as the society’s economy improves. An inferior good is the opposite of a normal good, which experiences an increase in demand along with increases in the income level.