Inferior good facts for kids

In economics, an inferior good is a type of product that people buy less of when their income (the money they earn) goes up. It sounds a bit strange, right? Usually, when you have more money, you buy more things. But with inferior goods, the opposite happens. When people have more money, they often choose to buy a better, more expensive version of that product instead.

What are Inferior Goods?

An inferior good is a product whose demand (how much people want to buy it) decreases as their income increases. Think about it this way: if you have very little money, you might buy the cheapest brand of something. But once you start earning more, you might decide to treat yourself to a nicer, more expensive brand. The cheaper brand then becomes an "inferior good" for you. It's not about the quality of the product itself being bad, but about how people's buying habits change with their income.

Real-Life Examples

Let's look at some examples to make this clearer.

• Supermarket bread vs. Bakery bread: Imagine someone with a small income. They might buy their bread from the supermarket because it's cheaper. But if their income goes up, they might decide to buy fresh, more expensive bread from a local bakery. The supermarket bread is the inferior good here.
• Used clothes vs. New clothes: When money is tight, people often buy clothes from second-hand stores. As their income grows, they might prefer to buy brand new clothes from regular shops. Used clothes would be the inferior good.
• Public transport vs. Cars: If you don't have much money, you might rely on buses or trains to get around. But if you start earning more, you might save up to buy your own car. Public transport then becomes an inferior good for you.
• Generic brands vs. Name brands: Many stores have their own cheaper "home brand" versions of products like cereal or soda. When people have more money, they often switch to well-known, more expensive name brands.

Inferior vs. Normal Goods

It's important to know that not all goods are inferior goods. Most products are actually "normal goods". A normal good is the opposite of an inferior good. For normal goods, the demand for them actually rises when people's income increases. For example, if you earn more money, you might buy more new clothes, go out to eat more often, or buy a bigger house. These would all be normal goods.

The idea of an inferior good helps economists understand how people make choices about what to buy, depending on how much money they have.

Images for kids

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  Good Y is a normal good since the amount purchased increases from Y1 to Y2 as the budget constraint shifts from BC1 to the higher income BC2. Good X is an inferior good since the amount bought decreases from X1 to X2 as income increases.

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  An item such as non-branded grocery products are common inferior goods. There is no set criteria of what constitutes an inferior good, but economists refer to an inferior good as any item preferred less when disposable consumer income increases.

See also

In Spanish: Bien inferior para niños