Think of several goods that, at your current income level, you would consider normal, others that...

Think of several goods that, at your current income level, you would consider normal, others that you would consider inferior. Try to determine the defining characteristics of normal and inferior goods by evaluating your list. What do the two groups have in common? How are they different from each other?

Expert Solution

An inferior good is a low quality good and consumed by the lower section of society. An inferior good is a type of good whose demand declines when income rises. In other words, demand of inferior goods is inversely related to the income of the consumer. ... Hence jowar, whose demand has fallen due to an increase in income, is the inferior good and wheat is the normal good.

Normal Good - Good for which demand (consumption) increases as consumer income rises, but at a rate slower than the rate of increase in income. Defined also as a good for which the income elasticity of demand is positive but less than one. Also called necessary good, it is the opposite of inferior good.

Classification of goods are always not remain same for every individual, for some person normal good is inferior or vice versa. So classification of goods are mainly based on the basis of Income. So in both the goods "Income" is the common factor.

BASIS FOR DIFFERENCE NORMAL GOODS INFERIOR GOODS

Normal goods are the goods whose demand goes up with the rise in consumer's income. Inferior goods are the goods whose demand falls down with the rise in consumer's income.

Income Elasticity of normal goods is Positive and inferior goods is Negative.

Thanks

Rahul Sunny answered 2 years ago

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