Income vs Supply and Demand

165 views 2 pages ~ 396 words
Get a Custom Essay Writer Just For You!

Experts in this subject field are ready to write an original essay following your instructions to the dot!

Hire a Writer

Products whose demand rises with an increase in income are considered standard goods (Sugden, 1985). A good is considered to be normal if our demand for it has increased as our income has grown. When one's income is low, they will choose low-quality, less costly coffee, whereas when one's income is higher, they will choose better-quality, more expensive coffee. The consumption of coffee is influenced by people's individual tastes, it should be emphasized. The more expensive organic food at the grocery store is another illustration of a typical item. People who have more money tend to want more organic goods. Inferior goods are the opposite of normal goods. As the income in a household increases, the demand for inferior goods decreases (Bilbie, 2009). People tend to buy less of inferior goods when the income is higher and more of them when the income is low. With an increase in income, the consumers immediately start trading up inferior goods. A good example of an inferior good is bus transportation. When the income is low, the consumers will use a bus as a mode of transport rather than air or train transportation because it is cheaper though time-consuming. When the income increases then air or train mode of transportation is preferred more to bus transportation.

Elasticity and inelasticity of demand refer to the degree of response of demand and supply in relation to the change in price (Oum et al., 1992). When the change in demand corresponds closely to the change in the price of a commodity, then the demand is elastic. If the change in demand does not closely respond to the change in the price of a commodity, then it is termed as inelastic demand. A luxury good has a high-income elasticity of demand because as people become wealthier, they will tend to buy more of the luxury commodity. If there is decrease in the income then the demand of the luxury goodwill decrease.


Bilbiie, F. O. (2009). Nonseparable preferences, fiscal policy puzzles, and inferior goods. Journal of Money, Credit and Banking, 41(2‐3), 443-450.

Oum, T. H., Waters, W. G., & Yong, J. S. (1992). Concepts of price elasticities of transport demand and recent empirical estimates: an interpretative survey. Journal of Transport Economics and policy, 139-154

Sugden, R. (1985). Consistent conjectures and voluntary contributions to public goods: why the conventional theory does not work. Journal of Public Economics, 27(1), 117-124.

April 19, 2023

Food Business Life

Subject area:

Coffee Grocery Store Money

Number of pages


Number of words




Writer #



Expertise Money
Verified writer

If you want to get things delivered on time, TomN2019 is one of the best solutions. He does things in the most accurate way and helps you feel safe by asking questions to make sure that everything is done right.

Hire Writer

This sample could have been used by your fellow student... Get your own unique essay on any topic and submit it by the deadline.

Eliminate the stress of Research and Writing!

Hire one of our experts to create a completely original paper even in 3 hours!

Hire a Pro