demand rises as income falls) are called “inferior goods.” An inferior good occurs when people trim back on a

good as income rises, because they can now afford the more expensive choices that they prefer. For example, a

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6.2 • How Changes in Income and Prices Affect Consumption Choices 147

higher-income household might eat fewer hamburgers or be less likely to buy a used car, and instead eat more

steak and buy a new car.

How Price Changes Affect Consumer Choices

For analyzing the possible effect of a change in price on consumption, let’s again use a concrete example.

Figure 6.4 represents Sergei's consumer choice, who chooses between purchasing baseball bats and cameras.

A price increase for baseball bats would have no effect on the ability to purchase cameras, but it would reduce

the number of bats Sergei could afford to buy. Thus a price increase for baseball bats, the good on the
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