Principles of Microeconomics / Unit 5 MIC 0415 short lesson, about 20 seconds
Normal, Inferior and the Two Effects
Captions available
The idea
For a normal good the income effect reinforces substitution: a price rise cuts quantity through both. For an inferior good it pulls the other way, since being poorer raises demand for it.
In practice
Inferior goods respond less to price than normal goods.
Where people slip
Only if the income effect overpowered substitution would demand slope up; evidence for such a good is rare and contested.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Unlocks
- Nothing yet depends on this.
Something wrong in this lesson? Flag it