Demand and Supply - Demand Shift Navigation
Demand and Supply - Demand Shift pg-9
Demand for an Inferior Good Shifts Back when Income Rises

For many people, goods like boxed macaroni and cheese, ramen noodles, and fast food are inferior goods.22 The graph to the right illustrates a consumers demand for boxed macaroni and cheese. For this consumer, macaroni and cheese is an inferior good.

When our consumer's income is low, her demand for boxed macaroni and cheese is given by DI1. On that demand curve, if macaroni and cheese sells for US$1.00 per box she'll buy 14 boxes per month, and she'll buy 11 boxes each month if they cost $2.50. If this consumer gets a raise, her income increases and her demand shifts back to DI2. The increase in income allows her to purchase other foods that she prefers to macaroni and cheese so she buys less macaroni and cheese at every price. At a price of $1.00 per box she only buys 7 boxes per month when her income is higher, and only 3 boxes per month at a price of $2.50. Even if we didn't know macaroni and cheese was an inferior good for her before, we can now see from the graph that it is.

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It is possible that these may be normal goods for some people with very high incomes. What makes a good an inferior good, is a relatively low price and the existence of more expensive alternatives that are more preferred. If ramen noodles are your favorite food, then they will not be an inferior good for you, no matter how much income you have or how inexpensive they are.

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