What's the difference between a normal good and an inferior good?



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pohnpei397's profile pic

Posted on (Answer #1)

The difference between normal goods and inferior goods has to do with the way in which demand for the goods varies in response to consumer incomes.

For a normal good, the more income that consumers have, the more they will buy of the good.  This is the way that most goods are.  However, there are some goods for which demand actually goes up as consumer incomes go down.  These are inferior goods.  An example of an inferior good would be something from, for example, a dollar store.  These goods are generally seen as less desirable and so people are not that interested in buying them.  However, when people's incomes decline, they become more interested in those goods because they are most concerned with price.


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