Income of consumer has a great impact on the demand of a product. If income of a person will increase his demand will increase for the goods and that particular goods is called as superior goods ,which demand is directly proportional to income.
But there are some goods which demand decreases according to increase in demand these types of goods are called as inferior goods.
it can also called as negative income elasticity of demand .
this theory depended on affordability, that means which can you afford at what income. if your income is high you can afford a BMW car but if your income is not high then you can wish only for a nano car so in high income demand of the nano car is decreased .
With change in income of the customer, taste and preference also change.So there value also change
But there are some goods which demand decreases according to increase in demand these types of goods are called as inferior goods.
it can also called as negative income elasticity of demand .
this theory depended on affordability, that means which can you afford at what income. if your income is high you can afford a BMW car but if your income is not high then you can wish only for a nano car so in high income demand of the nano car is decreased .
With change in income of the customer, taste and preference also change.So there value also change
there self esteem change, so they shift there preference from cheaper goods to costlier goods or valuable goods so that the demand of cheaper product decreases.
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