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प्रश्न
Distinguish between normal goods and inferior goods, with examples.
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उत्तर
| 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 |
संबंधित प्रश्न
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Demand curve has a positive slope.
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The quantity of a commodity that a consumer is willing to buy and is able to afford, given the prices of goods and the consumer's tastes and preferences is called demand for the commodity. Whenever one or more of these variables change, the quantity of the good Chosen by the consumer is likely to change as well. The relation between the consumer's optimal choice of the quantity of a good and its price is very important and this relation is called the demand function. Thus, the consumer's demand function for a good gives the amount of the good that the consumer chooses at different levels of its price when the other things remain unchanged.
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In India, Fixed deposits have long been a favourite investment choice of people, especially senior citizens, as it promise steady returns. It attracts those who are seeking a stable income. But it’s an illusion in the period of inflation. Inflation is the rate at which the general level of prices for goods and services rises, subsequently eroding the purchasing power of money. In simple terms, what money could buy today might not a few years down the line. Fixed deposits are financial instruments offered by banks where you deposit a lump sum amount for a fixed period at a predetermined rate of interest. Consider an investment of Rs 1 crore in a fixed deposit at a 6% annual interest rate and the annual rate of inflation is 5%. By the 10th year your pre inflation return is 1.79 crore, but post inflation it’s just 1.10 crore. The nominal value of investment in fixed deposits may appear to grow, inflation significantly diminishes their real value and purchasing power over time.
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