Inferior Goods

An inferior good is one for which, holding everything else constant except for income, an increase in income leads to a decrease in the quantity demanded, and conversely, a decrease in income leads to an increase in the quantity demanded.

Examples of Inferior Goods

When a person's income increases, they tend to reduce consumption of certain goods and services they consider to be of lower quality, as they can now afford goods they consider better. The most typical example is public transportation. When consumers' incomes increase, they tend to buy private vehicles or use the ones they already own more frequently. Therefore, an increase in income typically reduces the use of public transportation.