Question

Differentiate between Normal goods and Inferior goods.

Hint:

Normal goods become more popular as income rises, while inferior goods lose popularity as income increases.

Answer 1

Step 1: Definition of Normal goods.
Normal goods are goods whose demand increases as income rises. For example, luxury items, branded clothes, or high-end electronic gadgets.
Step 2: Definition of Inferior goods.
Inferior goods are goods whose demand decreases as income rises. As consumers’ income increases, they tend to substitute these goods with superior alternatives. Examples include generic brands or lower-quality food products.
Step 3: Comparison.
- **Normal goods:** Demand increases with rising income. - **Inferior goods:** Demand decreases with rising income.
Step 4: Conclusion.
Thus, normal goods and inferior goods differ in their demand behavior relative to changes in consumer income. Final Answer: \[ \boxed{\text{Normal goods' demand increases with income, whereas Inferior goods' demand decreases with income.}} \]