Difference between Normal Goods and Inferior Goods

Difference between Normal Goods and Inferior Goods

The major difference in both terms is that Normal goods are positively related to income whereas Inferior goods are inversely related to income. Normal Goods are like necessities goods demanded by all the consumers whereas Inferior Goods are associated with a wealth level of consumers.

To distinguish these terms, we must clear the meaning of these terms:

Meaning of Normal Goods:-

These refer to the goods which go positively with income. As the income increases, the quantity demanded of consumer goods increases but up to a certain limit, other things remain the same.

Meaning of Inferior Goods:-

These refer to the goods for which demand decreases when income increases and vice versa. For example, public transportation, generic grocery products, and kerosene, etc.

Chart of Difference:

Basis of Difference

Normal Goods

Inferior Goods

Meaning These are the goods for which demand increases with a rise in income and vice-versa. These are the goods for which demand decreases with a fall in income and vice-versa.

Price-Demand Relationship

In the case of these goods, there is always an inverse relationship between the price of commodity and quantity demanded. There may or may not be an inverse relationship between the price of the commodity and quantity demanded.
Income Effect  The income effect is positive here. For these goods, the income effect is negative.
Essentials of life These goods may or may not be the essentials of life. These goods refer to the essentials of life.

Degree of Income Elasticity

Less than One.
 i.e. EY<1
Less than zero.
 i.e. EY<0.

Engel curve

The Engel curve is upward sloping for these goods as showing income elasticity. For these goods, the Engel curve is downward sloping as showing income elasticity.

Price Consumption Curve

The price consumption curve is downward sloping as it indicates the effect of price on quantity demanded. Here, the price consumption curve is upward sloping as it indicates the effect of price on quantity demanded.

Examples

Some of the examples are- Television, branded clothes and expensive houses etc. Some of the examples are- bread, cereals, peanut butter and non-branded products etc.

Download the chart: –

If you want to download the chart please download the following image and PDF file:-

Difference between Normal Goods and Inferior Goods 1 min 300x276 - Difference between Normal Goods and Inferior Goods
Difference between Normal Goods and Inferior Goods
application pdf 150x150 - Difference between Normal Goods and Inferior Goods
Difference between Normal Goods and Inferior Goods

Conclusion:

Thus, these both types of goods are considered while estimating the tastes and preferences of customers in the market. The quantity demanded of both these goods by the consumers depends upon the income level of consumer.

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