What is an inferior good?
A) a product of low quality that we do not want to purchase
B) a product for which demand increases when income increases, and demand decreases when income decreases
C) a product for which demand increases when income decreases, and demand decreases when income increases
D) a product that is complementary
E) a product that is a substitute for another, better good

Question

Quizplus · Accepted Answer

An inferior good is a product for which demand increases when income decreases, and demand decreases when income increases. This is because when a person's income decreases, they may have to settle for a lower quality product due to budget constraints. Therefore, they demand more of the inferior good when their income is low, but when their income increases they can afford better quality products and demand for the inferior good decreases.

What Is an Inferior Good