Q. To what extent would each of the goods (Inferior, Normal, Complimentary, Staple, Consumer) have been affected by the recession?
Due to the recession people have to make cut backs on some of the goods, staple goods would not be affected to much by this as they are what is considered to be “necessary” by consumers, however consumers might buy less than they did previously or might look for a cheaper brand, usually staples offer little differentiation are usually compete on the basis of price. Inferior goods, which have a higher demand as a person’s income drops would benefit from the recession because people have to buy cheaper products as they can’t afford to buy the “luxury” alternatives, conversely, people who already had a low income may not even be able to afford to buy the products any more so the demand may fall due to the recession. Luxury goods would have been heavily hit by the recession because they are an unnecessary expense in a budgeted world, whilst there are people out there who can afford to buy luxury goods there are many people who go without so they can spend money on more essential items such as petrol, food and drink. The demand for the high end luxury goods would not have been that affected by the recession as the people who could previously afford them most likely still can, but generally they are not a high demand product anyway. The demand rate for normal goods slowly increases as the rate on income increases, because of the recession people’s income rates have dropped which means that the demand rate for normal goods also dropped, as necessary goods there is always demand for these items. Rather than consuming less, people may shop around to find cheaper deals such as “buy one get one free” as a way of tackling the recession.
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