Inferior Good – in Economics

Inferior Good – in Economics

An inferior good is a term used in economics to describe a good whose demand decreases as people’s earnings rise. In economics, an inferior good is one whose demand falls when consumer income rises (or rises when consumer income falls), as opposed to normal goods, which experience the opposite effect. As earnings and the economy improve, customers begin purchasing more expensive equivalents instead, and these commodities fall out of favor. Normal goods are those whose demand rises in tandem with rising consumer income.

An inferior good is one whose demand falls as income grows. In other words, demand for inferior items is inversely connected to consumer income. Consumption of substandard items is often associated with people from lower socioeconomic groups. Despite their identification with low-income segments of the population, there is no direct relationship between the commodities and their perceived low quality.

When people’s incomes rise, demand for lesser goods falls. In this sense, inferiority is an observable truth concerning cost rather than a remark about the quality of the commodity. In general, these commodities are inexpensive and serve their purpose sufficiently; however, if more expensive substitutes that provide more pleasure (or at least variety) become available, the use of the inferior items declines. When salaries are low or the economy is in recession, inferior items become a more cost-effective substitute for a more expensive goods.

Thus, direct relationships can be formed between inferior commodities and socioeconomic status. Because of the aforementioned observable inferiority, those with limited incomes prefer poorer things. Inferior goods are the polar opposite of normal products, whose demand rises even as earnings rise. Depending on the customer or market indifference curve, the amount of a good purchased can either increase, decrease, or remain constant as income rises.


In economics, as income rises or the economy improves, demand for inferior items falls. When this occurs, buyers will be more eager to spend money on more expensive substitutes. The quality or a change in a consumer’s socioeconomic level could be some of the causes for this move.

There are numerous examples of subpar goods. According to a number of economists, shopping at huge discount stores such as Walmart and rent-to-own places represents a substantial percentage of “inferior” goods. Cheaper automobiles are examples of poor goods. When a consumer’s income is limited, they will often pick less expensive vehicles. As a consumer’s income increases, the demand for cheap cars will decrease, while demand for costly cars will increase, so cheap cars are inferior goods.

Intercity bus service is another example of a subpar good. This mode of transportation is less expensive than flying or taking the train, but it takes longer. Traveling by bus becomes more acceptable when money is limited, but when money is more abundant than time, faster transportation is desired. In other nations with less established or badly maintained railways, the opposite is true: trains are slower and less expensive than buses, making rail travel an inferior good.

Certain financial services, such as payday lending, are subpar. Such financial services are typically sold to low-income individuals. People with moderate or higher incomes can often utilize credit cards with better payment terms or bank loans for larger quantities at significantly lower interest rates.