Question
Distinguish between normal goods and inferior goods, with examples.
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Basis
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Normal Goods
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Inferior Goods
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Definition
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Normal goods are those goods whose demand increases with the increase in income and whose demand decreases with a fall in income.
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Inferior goods are those goods whose demand increases with a fall in income and whose demand falls decreases with a rise in income.
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Income Effect
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In case of normal goods, there is a positive income effect.
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In case of inferior goods, there is a negative income effect.
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Examples
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Branded Clothes, Wheat, Milk.
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Coarse Cereals, Public Transportation - Bus, rail pass.
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