Question

Distinguish between normal goods and inferior goods, with examples.

Answer 1

Basis	Normal Goods	Inferior Goods
Definition	Normal goods are those goods whose demand increases with the increase in income and whose demand decreases with a fall in income.	Inferior goods are those goods whose demand increases with a fall in income and whose demand falls decreases with a rise in income.
Income Effect	In case of normal goods, there is a positive income effect.	In case of inferior goods, there is a negative income effect.
Examples	Branded Clothes, Wheat, Milk	Coarse Cereals, Public Transportation - Bus, rail pass