INFERIOR GOODS | NORMAL GOODS |
Inferior goods refer to those goods whose demand decreases with an increase in income. | Normal goods refer to those whose demand increases with an increase in income. |
For example, if the income of a consumer rises and he now prefers to replace his black and white TV with a colored one, then Black and white TV is an inferior good. | For example, if the demand of TV increases with a rise in income, then TV is called a normal good. |
Income effect is negative in case of inferior goods. | Income effect is positive in case of normal goods. |