Question

Explain with an example what kind of a commodity will have an inverse relationship between income and demand.

Answer 1

Inferior goods are those goods the demand for which falls with an increase in income of the consumer and increases with a fall in income. So, there is an inverse relationship between the income of the consumer and the demand for inferior goods.

For example, the demand for coarse cereals like maize or jowar may decrease when income increases beyond a particular level because the consumers may substitute it with superior cereals like wheat or rice. Coarse cereals, coarse cloth and black and white television are examples of inferior goods.