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  2. Inferior good - Wikipedia

    en.wikipedia.org/wiki/Inferior_good

    Good X is an inferior good since the amount bought decreases from X1 to X2 as income increases. In economics, inferior goods are those goods the demand for which falls with increase in income of the consumer. So, there is an inverse relationship between income of the consumer and the demand for inferior goods. [1] There are many examples of ...

  3. Giffen good - Wikipedia

    en.wikipedia.org/wiki/Giffen_good

    the goods must constitute a substantial percentage of the buyer's income, but not such a substantial percentage of the buyer's income that none of the associated normal goods are consumed. If precondition #1 is changed to "The goods in question must be so inferior that the income effect is greater than the substitution effect" then this list ...

  4. Consumer choice - Wikipedia

    en.wikipedia.org/wiki/Consumer_choice

    If the good is an inferior good, then the income effect will offset in some degree the substitution effect. If the income effect for an inferior good is sufficiently strong, the consumer will buy less of the good when it becomes less expensive. This is also known as a Giffen good (commonly believed to be a rarity).

  5. Income elasticity of demand - Wikipedia

    en.wikipedia.org/wiki/Income_elasticity_of_demand

    The most commonly used elasticity in economics, the price elasticity of demand, is almost always negative, but many goods have positive income elasticities, many have negative. A negative income elasticity of demand is associated with inferior goods; an increase in income will lead to a fall in the quantity demanded.

  6. Slutsky equation - Wikipedia

    en.wikipedia.org/wiki/Slutsky_equation

    The income effect on a normal good is negative, so if its price decreases, the consumer's purchasing power or income increases. The reverse holds when the price increases and purchasing power or income decreases. An example of inferior goods is instant noodles.

  7. Engel curve - Wikipedia

    en.wikipedia.org/wiki/Engel_curve

    For inferior goods, the Engel curve has a negative gradient. That means that as the consumer has more income, they will buy less of the inferior good because they are able to purchase better goods. For goods with a Marshallian demand function generated from a utility function of Gorman polar form, the Engel curve is linear.

  8. Income–consumption curve - Wikipedia

    en.wikipedia.org/wiki/Income–consumption_curve

    The income effect in economics can be defined as the change in consumption resulting from a change in real income. [1] This income change can come from one of two sources: from external sources, or from income being freed up (or soaked up) by a decrease (or increase) in the price of a good that money is being spent on.

  9. Utility maximization problem - Wikipedia

    en.wikipedia.org/wiki/Utility_maximization_problem

    The income effect occurs when the change in prices of goods cause a change in income. If the price of one good rises, then income is decreased (more costly than before to consume the same bundle), the same goes if the price of a good falls, income is increased (cheeper to consume the same bundle, they can therefore consume more of their desired ...