Economics – The allocation of resources - Demand | e-Consult

Normal Good: A normal good is a product for which demand increases as income increases, and demand decreases as income decreases.

Extension in Demand (Normal Good): If income increases, consumers have more money to spend, leading to an increase in the quantity of normal goods they demand. This is represented by a movement along the demand curve. The demand curve shifts to the right.

Diagram: A demand curve shifting to the right, labelled "Normal Good - Extension in Demand". The income axis is on the x-axis and quantity demanded is on the y-axis.

Contraction in Demand (Normal Good): If income decreases, consumers have less money to spend, leading to a decrease in the quantity of normal goods they demand. This is represented by a movement along the demand curve. The demand curve shifts to the left.

Diagram: A demand curve shifting to the left, labelled "Normal Good - Contraction in Demand". The income axis is on the x-axis and quantity demanded is on the y-axis.

Inferior Good: An inferior good is a product for which demand decreases as income increases, and demand increases as income decreases.

Extension in Demand (Inferior Good): If income decreases, consumers buy more of inferior goods because they are cheaper. This is represented by a movement along the demand curve. The demand curve shifts to the right.

Diagram: A demand curve shifting to the right, labelled "Inferior Good - Extension in Demand". The income axis is on the x-axis and quantity demanded is on the y-axis.

Contraction in Demand (Inferior Good): If income increases, consumers switch to better quality goods, leading to a decrease in the quantity of inferior goods they demand. This is represented by a movement along the demand curve. The demand curve shifts to the left.

Diagram: A demand curve shifting to the left, labelled "Inferior Good - Contraction in Demand". The income axis is on the x-axis and quantity demanded is on the y-axis.