Examples of inferior good in the following topics:
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- As a result, it is useful to outline the differences in income effects on normal, inferior, complementary and substitute goods:
- Inferior:Inferior goods, or goods that are less preferable, will demonstrate inverse relationships with income compared to normal goods.
- That is to say that an increase in income will not necessarily result in an increase in quantity for the inferior good, as the consumer derives minimal utility in purchasing the inferior good compared to other goods.
- Inferior goods are often sacrificed as income rises and consumers gain more choice/options.
- This graph demonstrates the inverse relationship between income and the consumption of inferior goods.
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- A negative income elasticity is associated with inferior goods.
- This is typical of a luxury or superior good.
- This is characteristic of a necessary good.
- These are called sticky goods.
- This is an inferior good (all other goods are normal goods).
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- If the income of the consumer, prices of the related goods, and preferences of the consumer remain unchanged, then the change in quantity of good demanded by the consumer will be negatively correlated to the change in the price of the good or service.
- Though in general terms and specific to normal goods, demand will exhibit a downward slope, there are exceptions: Giffen goods and Veblen goods
- A Giffen good describes an extreme case for an inferior good.
- example of a Giffen good, though a popular albeit historically inaccurate example is the purchase of potatoes (an inferior good) as prices continued to increase during the Irish potato famine.
- These goods are known as a Veblen goods.
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- An individual's demand function for a good (Good X) might be written:
- Only in unusual circumstances (a highly inferior good, a Giffen good) may a demand function have a positive relationship.
- An inferior good is characterized by an inverse or negative relationship between the change in income and change in demand.
- A superior good is a special case of the normal good.
- For an inferior good, a decrease in income will shift the demand to the right.
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- Demand is the relationship between the willingness to purchase a quantity of a good or service at a specific price.
- An increase in income will cause an outward shift in demand (to the right) if the good or service assessed is a normal good or a good that is desirable and is therefore positively correlated with income.
- Alternatively, an increase in income could result in an inward shift of demand (to the left) if the good or service assessed is an inferior good or a good that is not desirable but is acceptable when the consumer is constrained by income .
- The demand curve for a good will shift in parallel with a shift in the demand for a complement.
- A demand curve provides an economic agent's price to quantity relationship related to a specific good or service.
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- The demand schedule represents the amount of some good that a buyer is willing and able to purchase at various prices.
- In general, this means that the demand curve is downward-sloping, which means that as the price of a good decreases, consumers will buy more of that good.
- A market demand schedule is a table that lists the quantity of a good all consumers in a market will buy at every different price.
- However, special cases exist where the preference for the good or service may be perverse.
- Two different hypothetical types of goods with upward-sloping demand curves are Giffen goods (an inferior but staple good) and Veblen goods (goods characterized as being more desirable the higher the price; luxury or status items).
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- In general as the price of a good increases, the quantity demanded of that good decreases.
- The reason for this is because part of the value of the good is exclusivity.
- Giffen goods are very rare and are defined by three characteristics:
- It is an inferior good, or a good for which demand decreases as consumer income rises,
- In this instance, bread is a giffen good.
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- In we are comparing 'Good X' and 'Good Y' to identify how a change in income will alter the overall amount of each good would likely be purchased along a series of indifference curves (see Boundless atom on 'Indifference Curves').
- This translates to the graph above as the consumer makes choices to maximize utility when comparing the price of different goods to a given income level, substituting cheaper goods and more expensive goods dependent upon purchasing power.
- Inferior goods, on the other hand, will demonstrate an inverse relationship.
- Inversely, Giffen goods demonstrate a positive relationship, where the price rises will result in higher demand for the good and high consumption.
- To apply this to the concept of different types of goods above, one can view wage rates and leisure time as consumer goods.
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- The judicial power of the United States, shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish.
- The judges, both of the supreme and inferior courts, shall hold their offices during good behaviour, and shall, at stated times, receive for their services, a compensation, which shall not be diminished during their continuance in office.
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- There is pretty good evidence that to deal effectively with the world we need to feel good about ourselves.
- In fact, people are motivated to see their own group as relatively better than similar (but inferior) groups (i.e., positive distinctiveness).
- For example, people from some Middle Eastern Islamic countries might regard their country as inferior to the West in terms of economic and technological advancement but might regard their way of life as being morally superior.
- Intriguingly, the notion that inferior or "underdog" groups are hyper-motivated to succeed against superior groups turns out not to be true, generally.
- This makes sense when framed as a status issue: the superior group has more to lose if it is defeated by an inferior team while the inferior team, if it loses, has not lost anything but rather has affirmed the existing social order.