An inferior good is a good or service for which demand for the good will decrease as people’s income increases.
This is the opposite of a normal good where demand increases as income also increases. Most goods are considered to be normal goods as with more money, people tend to demand a little bit more of everything!
There are some goods and services though that become less desirable as people get wealthier. With more income, people are able to buy more expensive products and are therefore likely to decrease their demand for products which are associated with a low income.
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Income – money which is received for completion of work or through investments.
Normal good – a good for which demand will increase as people’s income also increases.
Luxury good – a good for which demand will increase more than proportionately following an increase in income.