Income and Demand
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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.
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Normal vs inferior goods
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Normal goods are those for which demand increases with income. Most goods are in this category. People want more nice clothes and new automobiles, ...
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