Question

Differentiate between the Normal goods and Inferior goods.

Answer 1

BASIS FOR COMPARISON	NORMAL GOODS	INFERIOR GOODS
Meaning	Normal goods are the goods whose demand goes up with the rise in consumer's income.	Inferior goods are the goods whose demand falls down with the rise in consumer's income.
Income Elasticity	Positive	Negative
Relationship between income changes and demand curve	Direct Relationship	Inverse Relationship
Preferred when	Prices are low	Prices are high