BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -What Is an Inferior Good? An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise. These goods fall out of favor as incomes and the economy improve as consumers begin buying more costly substitutes instead.

Detailed explanation-2: -When the price of an inferior good falls, two things happen: Consumers will substitute more of the inferior good for other goods because its price has fallen relative to those goods. The quantity demanded increases as a result of the substitution effect. The lower price effectively makes consumers richer.

Detailed explanation-3: -Inferior goods are goods whose demand drops as consumers’ incomes rise.

Detailed explanation-4: -In economics, an inferior good is a good whose demand decreases when consumer income rises (or demand increases when consumer income decreases), unlike normal goods, for which the opposite is observed.

Detailed explanation-5: -For example as a consumer’s income increases, his/her demand of the cheap cars will decrease, while demand for costly cars will increase. Here the cheap car is an inferior good for that consumer.