Inferior Goods

The goods that are purchased by the consumers can be classified in to the normal goods and the inferior goods. They are the two types of goods that are existent in the market. Let us take a look at the inferior goods here. Get Inferior Goods Macroeconomics Homework Help at Tutorspoint

The Examples

There are a number of examples that can be stated in this case. They include the tinned foods, the frozen vegetables and all the low quality goods that the people do not want to buy. In case of the normal goods there is a negative income elasticity seen for the demand. They are exactly the opposite of the normal goods. In case of the normal goods, with increase in income there is increased demand for these goods too.

The sales of the inferior goods are considered to be counter cynical in nature. This makes the company that is involved in the production of these goods also counter cynical in nature. This way becomes resistant to the economic cycles in a relative manner. This is because they are subject to the income effects in this case, which is very strong in nature.

True Inferior Goods

There are not many true inferior goods in the market. There are very few of them that are actually present in the market. But these goods may actually be beneficial to those for whom there is increased need of the cheap goods. This is possible when there is decrease in the income of the people. There may not be many customers, but there a number of them. The best example for this would be a pub which cheap liquor rates. This would be the place that would be running at its best during the time of recession. This is when people want to go for cheaper options than going for the costlier ones.

The Recession

In case of the elasticity, it is negative in nature. But in the time of recession, the demand for these goods actually tends to increase. This would depend up on the severity of the recession too.

Inferior Goods Macroeconomics Homework Help