Difference Between Similar Terms and Objects

Difference Between Normal and Inferior Goods

Normal vs Inferior Goods

In economics, a product that is used to satisfy needs and desires are called goods. Goods are tangible properties, unlike services, which are known as intangible properties. A tangible property, in law, is anything that can be touched. It also covers real property and personal property. They are classified as physical in nature. However, in some legal systems, intangible properties that have anything associated with physical items rather than physical properties hold greater significance. An example would be a promissory note which holds the legal rights of which the paper confers and, therefore, the physical paper is not the real significant property of it.

Characteristics of a good are that it is an object that can increase the utility of a consumer or a product directly or indirectly. They are modeled as to having to diminish in the marginal utility. Marginal utility, in economics, is the measurement of additional satisfaction or benefit that a consumer can obtain from buying additional units of commodity or from service. The concept of marginal utility is that a benefit obtained from an additional unit of a product to a consumer is inversely related to the number of products owned by the consumer.

There are also different types of goods. Examples of these types are normal goods, inferior goods, and luxury goods. The last of the examples, the luxury goods, is a type of product that increases in demand as the income rises. These goods have a high income elasticity of demand. This is because of the fact that if the consumer is wealthier, they will buy more of the luxury goods. This can also mean that the consumer will buy less of it if he or she experiences decline in the level of income. Luxury goods are not considered as essential to a consumer, and an example of this type is a luxury car.

Normal goods is a type of product that increases in demand as the income increases, but it also decreases when the level of the consumer’s income decreases. The price for this good remains constant. An example would be the amount of consuming food. A consumer with a higher income would consume more steak while having a lower level of income would lead the consumer into limiting the amount of steaks that he or she bought. This type of good has a positive association between two factors, the quantity demanded and the income.

Inferior goods are products that decrease in terms of demand when the income of the consumer is increased; this is in contrast with normal goods. An example would be a consumer buying

Cup O Noodles when he or she has a low income. The consumer settles with buying more of these noodles. However, when the consumer receives an increase in terms of income, the consumer will switch into buying more expensive and more wholesome food that he or she can afford.
Summary:

1.Goods are products that are used to satisfy the needs of a consumer. Unlike services, they have tangible properties.
2.Different types of goods exist. Examples of these are: luxury goods, inferior goods, and normal goods.
3.The difference between normal goods and inferior goods are their concepts. Normal goods increase in demand as the income of the consumer increases while inferior goods decrease in demand as the income increases.


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