Inferior Goods Defined
Inferior goods are products whose demand decreases as consumers' income increases. This is the opposite of normal goods, where demand rises with income.
Income Effect Analysis
The income effect describes how changes in purchasing power (real income) affect consumption. When a consumer's income rises, they tend to buy less of an inferior good and switch to better alternatives.
- Increase in Income leads to Decrease in Consumption of inferior goods.
- This relationship signifies a Negative Income Effect.
Conclusion on Inferior Goods
Therefore, in consumption patterns, inferior goods are characterized by a negative income effect.
Important Questions from Consumer behaviour
Which one of the following is not the assumption for consumer behaviour based on the Ordinal Utility Theory?
In a situation of decision under uncertainty, if a consumer faces equal expected income from two alternatives, then s/he will take decision on the basis of
Arrange the following concepts of consumer behaviour in chronological order
A. Law of diminishing marginal utility
B. Law of demand
C. Revealed Preference Analysis
D. Indifference Curve Analysis
Choose the correct answer from the options given below
Absolute income hypothesis explain
Match the terms with the statement given below:
Select the correct option:(a) Human behavior results from a continuous and multidirectional interaction between the person and the situation (i) Interactionalism (b) People are central to the organization and they must be developed to their potential (ii) Productivity Approach (c) Manager's efficiency depends on the optimum utilization of resources (iii) Contingency Approach (d) The belief that there is no one best option available for an organization (iv) HR Approach
