The recent recession has hurt several industries due to a decline in demand by households. Thinking of the relationship between income and demand discuss the following questions:
1. What are "normal" goods? Give an example in our current economy.
2. What are "inferior" goods? Give an example in our current economy.
Normal goods are those for which demand increases with income. Most goods are in this category. People want more nice clothes and new automobiles, ...
Normal vs inferior goods