Answer to Question #183164 in Microeconomics for Saman Khalil

Question

Michaels income declines and as a result, he buys more bananas. Is banana an inferior or normal good. What happen to michaels demand curve for bananas.

Answer 1

Bananas are an inferior good to Michael because their demand only rose upon the pay cut. He is therefore forced to buy them since they are a less costly substitute to other foods. By definition, inferior goods are those commodities that would experience a lower customer demand if the income were high. The demand curve for bananas will therefore shift left because the decrease in income affects Michael's ability to buy the commodity.