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What is an inferior good? An inferior good is a good or service where your demand goes down when your income goes up, and vice versa. Let’s consider a familiar

What is an inferior good?

An inferior good is a good or service where your demand goes down when your income goes up, and vice versa.

Let’s consider a familiar example: food.

When you’re a college student, your income is typically very low. But you still have to eat! You just may not be eating the fanciest meals, instead opting for inexpensive restaurants like McDonald’s. Or heating up a cup of instant noodles in your dorm.

However, once you graduate and your income increases, your meal choices will likely change. Your demand for Double Cheeseburgers and Top Ramen will probably decrease.

Demand for inferior goods is also likely to change as an economy moves through business cycles. In the video, we’ll test your knowledge by exploring how demand shifts for inferior goods during economic booms and recessions.

Want to learn more about demand and how people make choices about consumption? Check out our Micro sections on Supply, Demand, and Equilibrium and Consumer Choice.

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