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How does customers income effect the demand curve with inferior goods?

User MayureshP
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Final answer:

Customers' income directly impacts the demand curve for inferior goods, causing it to shift left, due to the negative income elasticity of demand.

Step-by-step explanation:

When considering how customers' income affects the demand curve for inferior goods, it is crucial to understand the role of income elasticity of demand. For normal goods, an increase in customers' income leads to a shift to the right of the demand curve, reflecting a positive income elasticity of demand. Conversely, for inferior goods, an increase in income results in a leftward shift of the demand curve, indicating a negative income elasticity. In other words, as customers earn more, they are likely to purchase fewer inferior goods, shifting the demand curve to the left, as they can now afford better alternatives. The extent of the shift in the demand curve for inferior goods depends on the magnitude of the negative income elasticity of demand.

User Schybo
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