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

Expert Answers
mkoren eNotes educator| Certified Educator

There is a difference between a normal good and an inferior good. The difference basically has to deal with how income affects the demand for the product.

With a normal good, an increase in income will lead to an increase in demand for that product. As people make more money, they will want to buy more of a given product. When people have more money, they might attend more sporting events, movies, or concerts. They might increase their purchases of higher-quality meats, such as steak or lamb, instead of buying ground meat.

With an inferior good, an increase in income will lead to a drop in demand. As a person’s income rises, they might stop shopping at discount clothing stores. They might also buy fewer generic brand products in grocery stores.

pohnpei397 eNotes educator| Certified Educator

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.