Difference between normal goods and inferior goods

Goods whose demand tends to increase as the consumer’s income increases are called normal goods. Against this, inferior goods are those that find a fall in demand as the consumer’s income increases.

Income is the basic determinant of market demand that determines the purchasing power of the consumer. Therefore, people with higher disposable income spend most of their income on consumer goods and services compared to lower income.

The income elasticity of goods describes some significant characteristics of the demand for the goods in question. When the income elasticity is zero, the quantity demanded does not respond to changes in income. When the income elasticity is more than one, then there is an increase in the quantity demanded. When the income elasticity is less than one, then there is a decrease in the quantity demanded. So here we are talking about the difference between normal goods and inferior goods. that is, how income affects the demand curve.

what is normal goods?

Normal goods refer to goods that are demanded in increasing quantities as consumer income increases. and in decreasing quantity as consumer income falls, but the price remains the same. Although, the rate of increase in demand will be less than the increase in income. Furniture, clothing, automobiles are some common examples that fall into this category.

The quantity demanded of normal goods increases with the increase in the real income of the consumer, but at different rates and at different levels of income, that is, the demand for good increases at a faster rate with an increase in income, however , slows down with a further increase in revenue.

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What is inferior goods?

These product are those whose demand decreases with the rise in shopper financial gain and the other way around. Such product have higher quality alternatives.
This concept is understood with Associate in Nursing example, bidi and cigarettes are 2 merchandise that buyers consume. the most explanation for this client mentality is that the merchandise is taken into account to be inferior if there’s a come by its demand once there’s a rise in its financial gain, on the far side a selected level.

Key difference between Normal goods and Inferior goods:

The distinction between traditional and inferior product is clearly drawn for the subsequent reasons:

  • Those product whose demand will increase with a rise in shopper financial gain are referred to as traditional product. Those product whose demand decreases with a rise in shopper financial gain on the far side an exact level are referred to as inferior product.
  • The financial gain snap of demand for traditional product is positive however but one. On the opposite hand, the financial gain snap is negative, that is, but zero.
  • In the case of traditional product, there’s an immediate relationship between changes in financial gain and therefore the demand curve. On the contrary, there’s Associate in Nursing indirect relationship between changes in financial gain and therefore the demand curve, in inferior product.
  • As costs fall, shoppers like traditional product to inferior ones. In distinction to the present, at increasing costs, shoppers would really like to own inferior product rather than traditional product.

Difference between normal goods and inferior goods


Consumer goods and services are divided into four broad classes, for the aim of analyzing the demand for financial gain, that are essential goods, substandard product, traditional product, luxury product. traditional product are fully opposite to inferior product, since once costs are low, individuals switch to traditional product, however once there’s a increment, they like inferior product to traditional product.

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