What is inferior goods

Definition: An inferior good is a type of good whose demand declines when income rises. In other words, demand of inferior goods is inversely related to the income of the consumer.

Description: For example, there are two commodities in the economy -- wheat flour and jowar flour -- and consumers are consuming both. Presently both commodities face a downward sloping graph, i.e. the higher the price the lesser will be the demand and vice versa. If the income of consumer rises, then he would be more inclined towards wheat flour, which is a little costly than jowar flour.

There are a few commodities the demands for which move in the converse path of the earning of the customer. These goods are known as inferior goods.

As the earning of the customer rises, the demand for an inferior good drop, and as the earning drops, the demand for inferior good increases. Instances of inferior goods incorporate low quality food items like cereals. A commodity can be a normal commodity for the customer at some degrees of income and an inferior commodity for them at other degrees of income. At very low levels of earning, a customer’s demand for low-quality cereals can rise with earning. However, after a level, any rise in earning of the customer is likely to drop his or her consumption and utilization of such food items as they change to better quality cereals.