ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A normal good is a good that experiences an increase in demand due to an increase in a consumer’s income. Normal goods have a positive correlation between income and demand. Examples of normal goods include food, clothing, and household appliances.

Detailed explanation-2: -In the case of inferior goods income and demand are inversely related, which means that an increase in income leads to a decrease in demand and a decrease in income leads to an increase in demand. For example, necessities like bread and rice are often inferior goods.

Detailed explanation-3: -An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise. These goods fall out of favor as incomes and the economy improve as consumers begin buying more costly substitutes instead.

Detailed explanation-4: -If a good is a luxury, the demand for the good is elastic. Because the good is not a necessity, consumers tend to buy less/more substantially when the price increases/decreases. A luxury good works well with the law of demand, which means the demand curve represents demand in the usual way.

Detailed explanation-5: -Giffen goods refers to those goods whose demand goes up with the rise in the prices. Inferior goods are goods whose demand falls down with the rise in the consumer’s income over a specified level.