ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economics, the demand for inferior goods decreases as income increases or the economy improves. When this happens, consumers will be more willing to spend on more costly substitutes. Some of the reasons behind this shift may include quality or a change to a consumer’s socio-economic status.

Detailed explanation-2: -The effect of change in income on consumer’s demand depends upon the nature of commodity. Inferior goods are those goods, the demand for which falls as income of the consumer increases. Hence, there is a negative effect.

Detailed explanation-3: -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-4: -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-5: -When consumer income levels increase, the demand for normal goods rises, while the demand for inferior goods lowers. If prices are low, consumers may prefer normal goods, but when prices rise, they might opt instead for inferior goods.