As the price of an inferior good increases, the income effect will induce the consumer to consume less of the good.

Question

Quizplus · Accepted Answer

For an inferior good, as income decreases (which is effectively what happens when the price of the good increases and the consumer's purchasing power decreases), consumers might actually consume more of the good because they cannot afford the more expensive substitutes, which is opposite to the typical reaction for normal goods.

As the Price of an Inferior Good Increases, the Income