Inferior Goods

Tax Glossary Definition

Inferior Goods

Inferior Goods – Inferior goods are goods whose demand decreases as consumer income increases and rises when income falls. This inverse relationship occurs because consumers tend to switch to higher-quality or more desirable substitutes when they have greater purchasing power. These goods typically serve as lower-cost alternatives to normal or luxury goods and are more in demand during economic downturns.

Example: Instant noodles or public transport may be considered inferior goods — as people’s incomes rise, they often switch to restaurant meals or personal vehicles instead

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