Exceptions exist, however, especially for individual consumers. Goods for
which quantity demanded falls when income rises are called inferior goods
Some consumers, for example, may demand fewer rides on public transit
(and more taxi rides) as their income rises. In this case, public transit
would be an inferior good for these consumers. We will say more about
normal and inferior goods in Chapter 4.
- Prices of Other Goods
We saw that a product’s demand curve has a negative slope because,
ceteris paribus, the lower the price of the product, the cheaper it is relative
to other products that can satisfy the same needs or desires. We call such
products substitutes in consumption If the price of apples goes down
but the price of oranges remains fixed, then apples have become cheaper
relative to oranges and the quantity demanded of apples will therefore
rise.
But suppose instead that the price of oranges rises while the price of
apples is unchanged. In this case, apples have again become cheaper
relative to oranges, and so we still expect consumers to substitute away
from oranges and toward apples. The increase in the price of oranges—a
substitute—leads to an increase in the quantity demanded for apples at
each price—a rightward shift of the demand curve.
Complements in consumption are products that tend to be used
jointly. Cars and gasoline are complements; so are golf clubs and golf
balls, and airplane flights to Calgary and ski-lift tickets in Banff. Because