George Way

IB Economics

October 15, 2008

Word Count:

Shoppers Changing Their Habits

With rising prices of food, consumers look for cheaper alternatives when buying

food. People are buying more store/generic brands and fewer brand names. Dining in has

also become more popular due to rising costs of food in general. People are being more

diligent by how they spend their money; utilizing coupons and buying in bulk.

In this situation, there is a decrease in income which, in turn, will inevitably lead

to an increase in consummation of inferior goods over superior goods. Market

equilibrium has been stable for the last few years, until now. Market equilibrium is when

the price and quantity are in perfect balance, equaling each other (Figure 1).

Due to the falling incomes, the market for superior/normal goods have declined and the

inferior goods’ market have been skyrocketing (Figure 1.2 and 1.3). Due to the decline in

income, inferior goods have become more prominent in the market while normal goods

have begun a steady decline in quantity demanded.

Figure 1

Figure 1.2

Figure 1.3