What are normal and inferior goods?
A normal good is a good whose demand will increase as income rises (people have more money to buy goods -> they buy more goods) and decrease as income decreases (people will have less money and will substitute away from the more expensive normal good and buy cheaper alternatives instead to save money). An inferior good is a good whose demand will decrease as income rises (people have more money and so can afford to buy the superior “normal” goods instead). A good example to use: if the price of butter goes up or people’s income goes down people will try to save money by substituting away from the more expensive butter (normal good) and to chose to buy Margarine instead (a cheaper, inferior good).
