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A good is considered to be normal or inferior based on the quality of that good. This quality can be either objective or subjective. If the good is considered to be of low quality, it will be an inferior good and demand for it will rise as incomes drop. Otherwise, it will be a normal good and demand for it will rise as incomes rise.
In some cases, a normal good might be objectively higher quality than an inferior good. For example, an expensive car might have more safety features and might offer more comfort than a cheaper car. In this case, the expensive car is measurably “better” than the inexpensive car. However, there are times when some or all of the perception is based on subjective tastes. This is often the case with regard to clothing. A brand of clothing may be considered normal simply because people like to wear clothes with that brand’s name on them. The “inferior,” generic clothing may be just as good but will be perceived as lower in quality simply because it lacks the brand name that people like. The same can be true of brand-name breakfast cereals as opposed to store brand generic cereals.
Thus, the distinction between normal and inferior goods comes about because of the quality, either real or perceived, of the goods.
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