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Inferior Good

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PPGPortal > Home > Concept Dictionary > I, J > Inferior Good

Inferior Good 

A good for which demand decreases as income rises.

(Dwayne Benjamin, Toronto PPG 1002H)


Inferior goods are generally lower quality goods which, as an individual’s income rises, he will buy less of because he can afford higher quality substitutes. For example, let us consider a student who eats an inexpensive brand of macaroni and cheese 5 nights a week in an effort to save money. If this student graduates and gets a high paying job, raising his annual income from just $5000 to $75 000, we would not expect this person’s macaroni consumption to rise along with his income. To the contrary, since he can now afford tastier and more nutritious dinners, we would expect his macaroni consumption to drop significantly. In this example, cheap macaroni and cheese is an inferior good.


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