Answer :
Final answer:
An inferior good is a type of good where the demand decreases as income rises, and vice versa. This rare phenomenon occurs due to people reducing their consumption of the good as their income increases in favor of more expensive choices they prefer. The Potato Famine in Ireland provides an example of how the consumption of inferior goods, like potatoes, can rise despite an increase in price.
Explanation:
An inferior good is a type of good where the demand decreases as income rises, and vice versa. This rare phenomenon occurs when people reduce their consumption of a good as their income increases because they can now afford more expensive choices that they prefer.
For example, during the Potato Famine in Ireland, the price of potatoes increased, leading to a rise in their consumption despite the increase in price. This is because potatoes were considered an inferior good at the time, and people could no longer afford their preferred choices due to scarcity.
Overall, an inferior good is characterized by a negative income elasticity of demand, meaning that as income increases (or decreases), the demand for the good decreases (or increases).
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