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5 June, 09:58

What can cause the supply curve for an inferior good to shift to the right?

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  1. 5 June, 10:34
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    A decrease in consumer income

    Explanation:

    Before we move on to answer the question directly, we need to understand what a supply curve is and what are inferior good is.

    A supply curve is a graphical representation which is plot of a change in price to a change in quantity supplied, obeying the dictates of the law of supply. The law of supply simply states that the higher the price, the higher the quantity supplied. Thus, it is expected that at higher prices, the quantity supplied should also be higher in order for profit maximization.

    So how does a supply curve looks like? A supply curves generally moves upward from left to right, this in confirmation to the law.

    What do we mean by an inferior good? An inferior good is one which does not obey the laws of demand and supply. A consumer good demand decreases in the face of rising income. This is in contrast to a normal good which is supposed to have an increase in demand with a rise in income.

    Now, what can make an inferior good supply curve shift to the right i. e have more positive income elasticity?

    What can cause this is no other factor than a decrease in income. When there is a decrease in consumer income, consumers would be willing to spend less on more expensive substitutes and thus turn over to their inferior goods counterparts. This make their demand go up, driving up the price and making the supply increase.

    This singular activity will shift the supply curve of inferior goods to the right.
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