Answer to Question #182949 in Microeconomics for Noor

Question

Why is the slope of the demand for inferior goods steeper than for a normal good? What happens to a normal and an inferior good when the price goes up? Show this graphically and explain.

Answer 1

In case of inferior goods, quantity demanded varies inversely with price when negative income effect is weaker than the substitution effect. In other words, even in case of inferior goods having weaker income effect, the demand curve will be downward sloping.