Goods for which demand goes down when income goes up are called inferior goods.

Quick Scoop

  • When people’s income rises , they buy less of inferior goods and switch to better-quality substitutes.
  • When income falls , demand for these goods goes up , because people can no longer afford the higher-quality options.
  • Typical examples: coarse cereals, cheap instant noodles, low-quality or generic brands, second-hand clothes, very cheap transport options.

In textbook language: an inferior good is one whose demand has a negative income elasticity (demand and income move in opposite directions).

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