Example of normal and inferior good
[DOC File]7a: Income Expansion Path
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The good is a normal good. When the income-consumption curve has a negative slope: The quantity demanded decreases with income. The income elasticity of demand is negative. The good is an inferior good. ( Engel Curves. Engel curves relate the quantity of good consumed to income. If the good is a normal good, the Engel curve is upward sloping.
Normal good - Wikipedia
The shape of the income expansion path shows whether a product is a normal good or an inferior good. When the income expansion path curves downwards towards the X-axis then Y is an inferior good and X would be a normal good. Since as income increases the consumption of X increase and the consumption of Y decreases.
[DOC File]Econ 604 Advanced Microeconomics
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We can prove that good X is an inferior good. One way to do it is to look at. Figure 7.e.3. and notice that between points B and C, as income increases, the consumption of good X decreases, which fits the definition of an inferior good. Another way is to look at the compensated demand curve and compare it with the ordinary demand curve.
[DOC File]7(e) The Compensated Demand Curve
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What is a normal good? What is an inferior good? Give an example. What are substitutes and complements? What variables are measured on the axes when drawing a demand curve? Be able to depict an increase or a decrease in demand on a graph. What does the supply curve represent? Why do economists use both the terms quantity supplied and supply?
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