00:01
So here we're talking about inferior goods.
00:02
And so we should immediately start by thinking about what an inferior good is.
00:06
An inferior good is one with a negative income elasticity, right? and that only begs the question, what the heck does that mean? it means that as income increases, demand falls, right? demand falls.
00:27
That's all that inferior means.
00:32
So you might imagine, for example, bus trips.
00:37
As your income increases, you ride the bus less because you get your own car, right? so now in our market, between quantity and price, the demand curve still slopes down, right? because the demand curve is a function of price, not of income, right? so you might be tempted to draw the demand curve in a different way.
00:57
But here, right, it's inferior has nothing to do with the price of the goods.
01:01
The demand curve still slopes down...