Economics Supply And Demand Questions Medium
A normal good and an inferior good are two types of goods that exhibit different patterns of demand in response to changes in income.
A normal good is a type of good for which demand increases as income increases, and demand decreases as income decreases. In other words, as consumers' income rises, they are willing and able to purchase more of a normal good, and as their income falls, they are likely to purchase less of it. Examples of normal goods include luxury items like high-end electronics, vacations, and designer clothing.
On the other hand, an inferior good is a type of good for which demand decreases as income increases, and demand increases as income decreases. This means that as consumers' income rises, they tend to shift their consumption towards higher-quality alternatives, leading to a decrease in demand for inferior goods. Conversely, as their income falls, consumers may opt for cheaper alternatives, resulting in an increase in demand for inferior goods. Examples of inferior goods include generic or store-brand products, low-quality goods, and public transportation.
In summary, the key difference between a normal good and an inferior good lies in the direction of the demand response to changes in income. Normal goods experience an increase in demand as income rises, while inferior goods experience a decrease in demand as income rises.