A normal good is a type of product where demand increases as consumer income rises. Think of things you'd buy more of if you had more money. If your income goes up, you buy more steak, not more ramen!
An inferior good is a product where demand decreases as consumer income rises. This doesn't mean the product is bad quality, it just means that people switch to better or more desirable alternatives when they have more money. Ramen noodles are often cited as an example!
| Feature | Normal Goods | Inferior Goods |
|---|---|---|
| Definition | Demand increases as income increases. | Demand decreases as income increases. |
| Income Elasticity of Demand | Positive ($>0$) | Negative ($<0$) |
| Consumer Behavior | Bought more when wealthier. | Bought less when wealthier, often switching to higher-quality substitutes. |
| Examples | Organic foods, branded clothing, restaurant meals | Generic brands, public transportation, heavily discounted items |
| Graphical Representation | Demand curve shifts right as income increases. | Demand curve shifts left as income increases. |
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