NORMAL

AND
INFERIOR
GOODS
A Presentation by:
Harmehar Kaur
Pranav Manchanda
Shreyansh Dubey
Kshitij Sighroha
Of XI Riverdale
What Are
Normal Goods?
■ Normal Goods are those
goods whose demand
increases with an increase
in income.
■ For example: If the
demand for TV increases
with a rise in income, then
TV will be called a
normal good. Income
effect is positive in case
of Normal goods.
What Are Inferior
Goods?
■ Inferior Goods refers to those goods whose
demand decreases with an increase in
income. There exists an inverse relationship
between income and the demand for inferior
goods. So income effect is negative in case
of inferior goods.
■ For example: If the income of a consumer
rises and he prefers to replace his black and
white TV with a coloured one, then demand
for Black and white TV will fall. In such
case B/W TV is an inferior good.
NORMAL GOODS V/s INFERIOR
GOODS
NORMAL GOODS INFERIOR GOODS

Normal goods refer to those goods whose Inferior goods refer to those goods whose
demand increases with an increase in income. demand decreases with an increase in income.

Income effect is positive in case of normal Income effect is negative in case of inferior
goods. goods.

There is a direct relationship between income There is an inverse relation between income
and demand for normal goods. and demand for inferior goods.
 Change In Income
(Normal Goods)
■ Increase In Income : As Income rises the demand for normal good also
rises at the same price. It leads to a rightward shift in the demand curve
of normal good.
■ As seen in the graph demand increases from OQ to OQ1 at the same
price OP, leading to a rightward shift from DD to D1D1.

■ Decrease In Income: With the fall in income the demand for normal
goods falls at the same price. It shifts the demand curve of normal goods
towards left .
■ As seen in thr graph demand decreases from OQ to OQ1 at the same
price OP, leading to a leftward shift from DD to D1D1.
Change In Income
(Inferior Goods)
■ Increase In Income: As income increases, the demand for inferior goods fall
at the same price. It leads to a leftward Shift in the demand curve of Inferior
good.
■ As seen in the graph the demand for inferior goods falls from OQ to OQ1 at
the same price OP. It leads to a leftward shift in the demand curve of inferior
good from DD to D1D1.

■ Decrease In Income: As Income decreases the demand for inferior goods

rises at the same price. It leads to a rightward shift in the demand curve of
inferior good.
■ As seen in the graph the demand for inferior goods increase from OQ to OQ1
at the same price OP. It leads to a rightward shift in the demand curve of
inferior good from DD to D1D1.