give examples of normal and inferior goods---> what are the similarities and the differences between the 2 groups?
http://en.wikipedia.org/wiki/Inferior_good
Normal Goods:
- Examples: A luxury car, vacation trips, high-end electronics, organic food.
- Normal goods are products that people demand more of as their income increases.
- The income elasticity of demand (IED) for normal goods is positive, meaning that as income increases, the demand for these goods increases proportionally.
- Normal goods exhibit a positive relationship between income and demand.
Inferior Goods:
- Examples: Generic brands, used products, public transportation, instant noodles.
- Inferior goods are products that people demand less of as their income increases.
- The IED for inferior goods is negative, meaning that as income increases, the demand for these goods decreases.
- Inferior goods exhibit a negative relationship between income and demand.
Similarities between Normal and Inferior Goods:
1. Both normal and inferior goods are categories used in economics to classify different types of products based on income elasticity of demand.
2. The demand for both types of goods can change with changes in consumer income.
3. The demand for both types of goods can be influenced by factors such as consumer preferences, price, and availability.
Differences between Normal and Inferior Goods:
1. Normal goods are products for which demand increases when consumer income increases, while inferior goods are products for which demand decreases when consumer income increases.
2. Normal goods are often associated with higher quality, luxury, or premium products, whereas inferior goods are typically associated with lower quality or less desirable options.
3. Normal goods tend to have a positive relationship between income and demand, while inferior goods have a negative relationship between income and demand.
4. The income elasticity of demand for normal goods is positive, whereas for inferior goods, it is negative.