Distinguish between the following: a. Normal goods and inferior goods

Normal goods are goods for which demand increases as consumer income increases, while inferior goods are goods for which demand decreases as consumer income increases. In other words, normal goods are considered to be higher quality or more desirable goods that consumers prefer to purchase as they have more disposable income, while inferior goods are lower quality or less desirable goods that consumers only purchase when they have limited funds.

Normal Goods

- Definition: Goods whose demand increases as income increases.
- Characteristics:
- Essential or desirable commodities
- Positive income elasticity of demand
- Examples: Food, clothing, healthcare

Inferior Goods

- Definition: Goods whose demand decreases as income increases.
- Characteristics:
- Non-essential or undesirable commodities
- Negative income elasticity of demand
- Examples: Used cars, instant noodles, public transportation (for people with higher incomes)