ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Normal goods are the opposite of inferior goods, whose demand decreases with an increase in the consumer’s income or expansion of the economy (i.e., there is an inverse relationship between the demand and the consumer’s income).

Detailed explanation-2: -When there is an increase in a person’s income, for example due to a wage rise, a good for which the demand rises due to the wage increase, is referred as a normal good. Conversely, the demand for normal goods declines when the income decreases, for example due to a wage decrease or layoffs.

Detailed explanation-3: -Detailed Solution. The correct answer is Demand increases when income increases. A normal good is a good for which demand increases as consumers income increases and demand decreases as consumer income decreases. Normal goods demand is directly proportional to the income of consumers.

Detailed explanation-4: -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.