Inferior Good 2019-11-18 08:00:00

Inferior Good

Inferior goods are goods which, due either to relative or actual quality, has the demand for itself decrease as the income levels rise. In other words, inferior goods have a lower price compared to similar goods. In some cases, it can also mean the good is inferior quality. People with lower incomes tend to prefer inferior goods because they are more affordable. Examples of inferior goods vs. normal goods are:

Spam vs. premium meat
Bus travel vs. car travel
McDonald’s coffee vs. Starbucks

Looking at the broader economy, as income levels increase, consumer demand shifts to more expensive substitutes and away from inferior goods. The opposite is also true — as the economy declines and along with it, income levels, consumer demand shifts back to less costly inferior goods.


Manage risk and help maximize opportunity

Investment Property Wealth Management eBook

Download the eBook