Income Elasticity of Demand for Inferior Commodity
Income elasticity of demand measures the responsiveness of quantity demanded to a change in income. For inferior goods, the income elasticity of demand is negative.

Explanation
- Definition of Inferior Goods: Inferior goods are those for which demand decreases as consumer income rises. These goods are typically lower-quality or less desirable substitutes for higher-quality goods.
- Negative Income Elasticity: The negative income elasticity of demand for inferior goods indicates that as income increases, the quantity demanded decreases. This is because consumers prefer to upgrade to higher-quality goods when their income rises.
- Example: A common example of an inferior good is generic store-brand products. As consumers' income increases, they may switch to more expensive, name-brand products, leading to a decrease in demand for the inferior goods.
- Implications: The negative income elasticity of demand for inferior goods contrasts with normal goods, for which the income elasticity is positive. For normal goods, as income rises, demand also increases.
- Policy Considerations: Understanding the income elasticity of demand for different types of goods is important for policymakers, businesses, and consumers. It helps predict how consumer behavior will change in response to changes in income levels.
In conclusion, the income elasticity of demand for an inferior commodity is negative, indicating a decrease in demand as income increases.