What is inferior goods?

Lower goods are goods that are experiencing a reduction in demand when consumer intake increases. The opposite of lower goods is normal goods that are experiencing an increase in demand when increasing consumers are increasing. These concepts come from consumer theory in microeconomics that combine preferences with the demand of curves. Consumer theory uses models to represent hypothetical formulas of demand for individual buyers. Public transport is usually used by those who cannot afford a passenger vehicle and expenses related to ownership. Passenger vehicles offer a shortening of transport time and an increase in comfort that does not have to follow the bus schedule. Increases enables the purchase or rental of vehicle, car, gas insurance and regular maintenance. If this happens, the use of public transport is surrendered in favor of the use of the car, normal good.

Economists use the term elasticitapoptávka after referring to a change in demand for an item with increasing income. Believes that the inferior goodsIt has a negative elasticity of demand. On the contrary, normal goods have positive flexibility of demand.

Another economic term used with normal and inferior goods is the income effect. The income effect is the idea that consumers buy more certain goods as the price of a good fall. In the case of normal goods, there is a positive income effect, as the consumer with the same level of income can afford more good. The effect of income is negative with lower good, but another effect called the substitution effect causes a slight overall increase in lower good consumption, as the price decreases.

There is an extremely rare type of inferior goods called Giffen Goods. Economists disagree whether Giffen Good actually exists in a real situation. And Giffen Good is a lower good that consumers buy more prices that increase and violate the law of demand.

In the past, economists have claimed that potatoes wouldLY GIFFEN Good during potato famine in Ireland. However, the lack of potatoes in the ground means that it was not possible for consumption to increase with increasing price. Some economists believe that Rice was in China when the subsidies were raised. They say that even if the cost of rice has increased, rice remained the least expensive source of calories and was therefore purchased in larger quantities.