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Question
Distinguish between normal goods and inferior goods, with examples.
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Solution
| 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 |
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