Difference between Normal Goods and Inferior Goods Last Updated : 20 Jul, 2023 Comments Improve Suggest changes 2 Likes Like Report Normal Goods and Inferior Goods are two types of goods whose demand increase and decrease with an increase in the demand for a commodity respectively. What are Normal Goods?The goods whose demand increases when there is an increase in the income of the consumer are known as Normal Goods. These include the commodities which we usually purchase. Besides, in general, consumers purchase more of normal goods when their income increases and purchase less of these goods when their income falls. For example, if demand for a Refrigerator increases with an increase in income, then the Refrigerator will be said to be a normal good. The income effect of normal goods is positive. In the above graph, the income of the consumer is shown on Y-axis and the demand for a normal good (say, Refrigerator) is presented on X-axis. When there is an increase in the income from OY to OY1, then the demand for Refrigerator will also rise from OQ to OQ1. What are Inferior Goods?The goods whose demand reduces when there is an increase in the income of the consumer are known as Inferior Goods. In simple terms, there exists an inverse relationship between the consumer's income and demand for inferior goods. Therefore, the income effect of inferior goods is negative. Consumers usually purchase inferior goods because they are essential for their life; like, coarse grains, etc. For example, if the consumer's income increases and he prefers to replace his Single-Door Refrigerator with French door style refrigerator, then the demand for Single-Door Refrigerator will fall. Also, in this case, the Single-Door Refrigerator is the Inferior Good. In the above graph, the income of the consumer is shown on Y-axis, and the demand for an inferior good (say, Single Door Refrigerator) is shown on X-axis. When there is an increase in the income from OY to OY1, then the demand for Single Door Refrigerator will also fall from OQ to OQ1 because the consumer shifts from Single Door Refrigerator to French Door Style Refrigerator. Difference between Normal Goods and Inferior GoodsBasis Normal Goods Inferior Goods MeaningThese are the goods whose demand increases when there is an increase in the income of the consumer.These are the goods whose demand reduces when there is an increase in the income of the consumer.RelationThere is a direct relationship between the income of the consumer and the demand for normal goods.There is an inverse relationship between the income of the consumer and the demand for inferior goods.Income EffectThe income effect of normal goods is positive.The income effect of inferior goods is negative.Law of DemandNormal Goods follow the Law of Demand. It means that there is an inverse relationship between the price of a normal good and its quantity demanded.Inferior Goods may or may not follow the Law of Demand. It means that there may or may not be an inverse relationship between the price of inferior goods and its quantity demanded.ExampleGarlic Butter is a normal good if its demand increases when there is an increase in income.Plain Butter is an inferior good if its demand decreases when there is an increase in income. Create Quiz Comment J jainvanmy8r Follow 2 Improve J jainvanmy8r Follow 2 Improve Article Tags : Microeconomics Commerce Commerce - Difference Between Commerce - 11th Explore Chapter 1: IntroductionIntroduction to Microeconomics 6 min read Microeconomics and Macroeconomics: Meaning, Scope, and Interdependence 3 min read Economic Problem & Its Causes 4 min read Central Problems of an Economy 6 min read Chapter 2: Consumer's EquilibriumTheory of Consumer Behaviour 6 min read Difference between Needs and Wants 8 min read Utility Analysis : Total Utility and Marginal Utility 7 min read Law of Diminishing Marginal Utility (DMU) : Meaning, Assumptions & Example 4 min read Consumer's Equilibrium in case of Single and Two Commodity 9 min read Indifference Curve : Meaning, Assumptions & Properties 9 min read Budget Line: Meaning, Properties, and Example 10 min read Difference between Budget Line and Budget Set 5 min read Shift in Budget Line 4 min read Consumer’s Equilibrium by Indifference Curve Analysis 4 min read Chapter 3: DemandTheory and Determinants of Demand 7 min read Individual and Market Demand 7 min read Difference between Individual Demand and Market Demand 3 min read What is Demand Function and Demand Schedule? 5 min read Law of Demand 12 min read Movement along Demand Curve and Shift in Demand Curve 6 min read Difference between Expansion in Demand and Increase in Demand 3 min read Difference between Contraction in Demand and Decrease in Demand 3 min read Substitute Goods and Complementary Goods 6 min read Difference between Substitute Goods and Complementary Goods 2 min read Normal Goods and Inferior Goods 6 min read Difference between Normal Goods and Inferior Goods 3 min read Types of Demand 3 min read Substitution and Income Effect 5 min read Difference between Substitution Effect and Income Effect 3 min read Difference between Normal Goods, Inferior Goods, and Giffen Goods 4 min read Chapter 4: Elasticity of DemandPrice Elasticity of Demand: Meaning, Types, Calculation and Factors Affecting Price Elasticity 7 min read Methods of Measuring Price Elasticity of Demand: Percentage and Geometric Method 6 min read Difference between Elastic and Inelastic Demand 5 min read Relationship between Price Elasticity of Demand and Total Expenditure 3 min read Chapter 5: Production Function: Returns to a FactorProduction Function: Meaning, Features, and Types 6 min read What is TP, AP and MP? Explain with examples. 3 min read Law of Variable Proportion: Meaning, Assumptions, Phases and Reasons for Variable Proportions 9 min read Relationship between TP, MP, and AP 5 min read Law of Returns to Scale 3 min read Difference between Returns to Factor and Returns to Scale 2 min read Chapter 6: Concepts of Cost and RevenueWhat is Cost Function? 6 min read Difference between Explicit Cost and Implicit Cost 2 min read Types of Cost 7 min read What is Total Cost ? | Formula, Example and Graph 4 min read What is Average Cost ? | Formula, Example and Graph 4 min read What is Marginal Cost ? | Formula, Example and Graph 3 min read Variable Cost: Meaning, Formula, Types and Importance 11 min read Interrelation between Costs 6 min read Types of Cost 7 min read Concepts of Revenue| Total Revenue, Average Revenue and Marginal Revenue 4 min read Relationship between Revenues (AR, MR and TR) 5 min read Break-even Analysis: Importance, Uses, Components and Calculation 5 min read What is Break-even Point and Shut-down Point? 2 min read Chapter 7: Producer’s EquilibriumProducer's Equilibrium: Meaning, Assumptions, and Determination 9 min read Chapter 8: Theory of SupplyTheory of Supply: Characteristics and Determinants of Individual and Market Supply 6 min read Difference between Stock and Supply 3 min read Law of Supply: Meaning, Assumptions, Reason and Exceptions 6 min read Changes in Quantity Supplied and Change in Supply 6 min read Difference between Movement Along Supple Curve and Shift in Supply Curve 4 min read Difference between Change in Quantity Supplied and Change in Supply 4 min read Difference Between Expansion of Supply and Increase in Supply 4 min read Difference between Contraction of Supply and Decrease in Supply 3 min read Price Elasticity of Supply : Type, Determinants and Methods 7 min read Types of Elasticity of Supply 4 min read Chapter 9: Forms of MarketMarket : Characteristics & Classification 7 min read Perfect Competition Market: Meaning, Features and Revenue Curves 11 min read Monopoly Market: Features, Revenue Curves and Causes of Emergence 8 min read Monopolistic Competition: Characteristics & Demand Curve 9 min read Oligopoly Market : Types and Features 8 min read Difference between Perfect Competition and Monopoly 6 min read Difference between Perfect Competition and Monopolistic Competition 6 min read Difference between Monopoly and Monopolistic Competition 6 min read Distinction between the four Forms of Market(Perfect Competition, Monopoly, Monopolistic Competition and Oligopoly) 5 min read Long-Run Equilibrium under Perfect, Monopolistic, and Monopoly Market 4 min read Profit Maximization : Meaning, Elements, Conditions and Formula 7 min read Profit Maximization in Perfect Competition Market 4 min read Profit Maximization in Monopoly Market 3 min read Chapter 10: Market Equilibrium under Perfect CompetitionDetermination of Market Equilibrium under Perfect Competition 8 min read Effects of Changes in Demand and Supply on Market Equilibrium 15+ min read Price Ceiling and Price Floor or Minimum Support Price (MSP): Simple Applications of Supply and Demand 6 min read Difference between Price Ceiling and Price Floor 3 min read Like