ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Normal goods experience an increase in demand when incomes increase. Normal goods are also called necessary goods.

Detailed explanation-2: -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-3: -The income effect describes how an increase in income can change the quantity of goods that consumers will demand. For so-called normal goods, as income rises so does the demand for them (and vice-versa). This is reflected in microeconomics via an upward shift in the downward-sloping demand curve.

Detailed explanation-4: -Veblen goods are luxury items that connote status in society, such as cars, yachts, fine wines, celebrity-endorsed perfumes, and designer jewelry. Giffen goods are essential goods, such as rice, potatoes and wheat. Demand stays high when prices increase because there is no ready substitute for them.

Detailed explanation-5: -Key Takeaways. A Giffen good is a low-income, non-luxury product for which demand increases as the price increases and vice versa.