Everything about Normal Good totally explained
In
economics,
normal goods are any
goods for which
demand increases when income increases, for example with a positive
income elasticity of demand. The term doesn't necessarily refer to the quality of the good.
Depending on the
indifference curves, the amount of a good bought can either increase, decrease, or stay the same when income increases. In the diagram below, good Y is a normal good since the amount purchased increases from Y1 to Y2 as the
budget constraint shifts from BC1 to the higher income BC2. Good X is an
inferior good since the amount bought decreases from X1 to X2 as income increases.
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