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Normal goods

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In economics, the so – called real normal , are those who by their economic performance successfully meet the Normal Law of Demand . By referring to this law, we are referring to the fact that it complies with the principle that the demand for these goods grows along with the growth of consumer income.  Most consumer goods make up the group called normal goods. It differs from inferior goods, precisely because the latter violate the law of demand. As the consumer’s income increases, his demand falls.

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What are normal goods?

They are called real normal to those consumer products that respect the Normal Law of Demand . This means that the demand for normal goods grows as consumer income increases.  These goods differ from inferior goods in the fact that inferior goods show a fall in demand as consumer income grows.

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  • Which are?
  • Types
  • Demand curve for normal goods
  • Examples

Which are?

For the economy , normal goods have as an essential characteristic the positive variation exhibited by demand as the income of consumers grows.

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An increase in the income of consumers causes an increase in the quantity of normal goods demanded. Therefore, increasing people’s income produces an effect known as positive income elasticity . The greater the budget of a person, the greater the consumption of a normal good.

An increase in the price of normal goods has a negative effect on demand. This means that by increasing the price of a normal good, consumers will reduce their consumption of that good. Therefore, the curve of this demand will always be negative or null, in the case of normal goods with perfect elasticity.

Types

When we refer to normal goods, we can distinguish two well-defined types. The distinction is related to the speed with which demand moves as a function of consumer income:

  • Basic goods : The demand for these normal goods grows at a slower rate than the income of consumers . We can locate in this type of normal goods bread, milk, eggs, etc.
  • Luxury goods or higher : Their demand shows faster growth than the growth of consumer income. This can be observed in leisure services, clothing, meat, fish, etc.

Demand curve for normal goods

The demand curve for normal goods behaves respecting the Normal Law of Demand . This means that, as consumer incomes grow, the demand curve shows growth.

With regard to prices, the behavior of normal goods is also respecting the law. As prices rise, the demand for those goods will experience a drop in consumption. It is likely that when this occurs, there will be growth in substitute goods .

Examples

Among the foods that are part of normal goods, we can list the following:

  • Beef
  • Fish
  • Dairy products
  • Fruits and vegetables
  • Cheeses

Other goods and services that we can consider normal:

  • Brand clothing
  • Services related to leisure and entertainment
  • tourism
  • Private education

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