If bread is an inferior good, then what will happen to the demand for bread as the consumer income increases? (Right or Left or No Shift)
Answers
If bread is an inferior good, the demand for bread will decrease when the income of consumer increases. It means that the demand curve for bread will shift to the left side.
Explanation:
Inferior goods:
These are the goods, the demand for which decreases as income of buyers rises. There is inverse/negative relationship between income and demand. Or, in case of inferior goods, income effect is negative.
Why?
When the income increases: The consumer prefers to shift on to superior substitutes, because now he can afford them. Buying less of a commodity at its existing price implies a backward shift in demand curve.
When the income decreases: The consumer is compelled to depend on inferior goods because he has to cut his consumption of superior substitute and buy more of the inferior goods. It implies a situation of forward shift in demand curve.
☆ Law of demand may fail in case of inferior goods.
Hope this helps :)
[tex][/tex]
As income increases the demand for a good (say bread) Falls.It leads to leftward shift in the demand curve of inferior good (bread).
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More to know !
✏️ Normal goods refers to those goods whose demand rises with the rise in the income of consumer.
✏️ Inferior goods refers to those goods whose demand falls with the rise in the income of consumer.
✏️Demand curve shifts towards left because of :
- decrease in the price of substitute goods
- increase in the price of complementary goods
- decrease in income (normal goods)
- increase in the income (inferior goods)
- decrease in population
- taste not in prefer of commodity
- expectation of future decrease in price.
