Inferior good

As an inferior good is referred to in the economics and there especially in microeconomics a class of goods that thereby distinguish themselves from others that changes according to a change in income of the consumer demand for them in a specific way. Your specific classification criterion is controversial in the literature.

Definition

This article uses the following - based on definition of inferior goods - probably most common:

Definition: We call a Good as inferior if its demand with rising income (absolute) decreases. Also referred to as normal when the demand (absolute ) increases.

Differences in definitions

Part of the literature assumes, in derogation from the above definition before other distinctions. Below are some different approaches are outlined:

• Option 1: This is known as a good relatively inferior good (also: normal good ), if demand less than proportionally with increasing income increases. This is known as the superior one Good Good if demand increases disproportionately with increasing income. This is known as a good absolutely inferior good when demand absolute decreases with increasing income.
• Version 2: This is known as a good normal good when demand less than proportionally with increasing income increases. This is known as the superior one Good Good if demand increases disproportionately with increasing income. This is known as a good inferior good when demand absolute decreases with increasing income.
• Version 3: This is known as a good normal good when demand less than proportionally with increasing income increases. This is known as a good luxury item when demand increases disproportionately with increasing income. This is known as an estate the superior Well, if it is either a normal or a luxury item. This is known as a good inferior good when demand absolute decreases with increasing income.

Properties

When adding in the definition of the income elasticity of a good just then (and only then ) is inferior, if the income elasticity is negative.

It should be noted that the characterization of a property is not linked as inferior or normal fixed with a good, but always from the external circumstances ( absolute level of income, prices, preferences ) depends. The same material can represent with a low income is a normal good, however, be transformed into an inferior good at a certain income level so without further notice.

Example

• With an income of 1000 euros a month simple supermarket bread is consumed for 10 euros. Once the income has risen to 2,000 euros, making you look more bread from the bakery opposite and the consumption of plain bread drops to 3 euros. Simple supermarket bread is an inferior good in this example.
• With an income of 1,000 Euros a month for 30 euros for movie tickets to be spent. Once the income has risen to 2,000 euros, an increase in expenditure on cinema tickets at 45 euros. Income is thus increased and spending on cinema programs have also increased. The movie transitions are a normal good in this example.