Normal vs. Inferior Goods: How They're Different (and Similar)

In order to become knowledgeable about economics, it's important to learn about normal and inferior goods, as well as how income impacts consumer demand for these types of products. Discover some key facts about normal good vs. inferior good and review some examples of each.

normal good versus inferior good ramen noodles normal good versus inferior good ramen noodles
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What Are Inferior Goods?

Inferior goods are the types of products people typically purchase when their income is low. They generally represent the cheapest options for meeting a consumer's needs, so they are satisfactory options for consumers who do not have a lot of money. These products are typically the lowest quality products available, purchased only out of economic necessity.

  • Consumers who consistently maintain a low-income level tend to purchase inferior goods most or all of the time.
  • When people who ordinarily make more money experience a loss in income, they will shift to purchasing inferior goods out of necessity until their income rises.

Demand for inferior goods has an inverse relationship with income. As income decreases, demand for inferior goods increases. Think of it this way: When money is tight, consumers seek the cheapest possible products. The reverse is also true. As income increases, demand for inferior goods decreases. As a consumer's access to money increases, they seek alternatives to inferior goods.

What Are Normal Goods?

When a person's income rises, the individual generally stops buying inferior goods, switching instead to normal goods. These items cost more than inferior goods and are generally of higher quality. When consumers have enough money to purchase normal goods, they will choose these items over inferior goods.

  • When faced with choosing between a normal good vs. inferior good, those with sufficient income will generally opt to buy a normal good.
  • When individuals who typically have a low income come into extra money, such as a raise, a bonus or a win (via lottery or casino, for example), they may treat themselves by purchasing normal goods.

Demand for normal goods tends to have a direct relationship with income. Demand for normal goods increases as income increases. However, if a consumer's income goes down (such as due to a job loss or inability to work due to illness or injury), then the person's demand for normal goods will also go down. They will seek inferior goods instead.

Visualize Normal vs. Inferior Goods

Review the chart below to get a sense of how income impacts the demand for normal goods and inferior goods.

demand for normal goods versus inferior goods graph chart
(CC BY-ND 4.0)
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Normal Good vs. Inferior Good: Examples to Consider

Consider the difference between a normal good vs. inferior good by reviewing some examples.

Category

Normal Good Examples

Inferior Good Examples

coffee

Starbucks

convenience store coffee

tea

brand name tea bags

generic or store brand tea bags

noodles

Chinese restaurant takeout

ramen noodle packets

canned goods

brand name canned items

generic or store brand canned items

prepackaged meals

home delivery meal kits

frozen dinners from supermarket

prepared meals

casual dining restaurant

fast food restaurant

pizza

takeout or home delivery pizza

frozen pizza from supermarket

soup

homemade with fresh ingredients

canned soup

grains

Rice-a-Roni mix

plain white rice

fruit

fresh fruit

canned fruit

ground beef

ground round

basic ground beef

beverages

bottled juice

juice flavored mixes for water

footwear

Keds® sneakers

no-name sneakers

apparel

department store brand

Walmart brand

entertainment

subscription-based TV apps

local TV via antenna

games

purchased board games

cards or homemade games

personal care items

mass-market brands

generic or store brands

fitness

gym membership

exercise at home without equipment

Learn About Other Types of Goods

Not all goods are normal goods or inferior goods. Some are items that people tend to purchase regardless of their financial situation, while others are luxury items purchased only by those with a very high income.

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Giffen Goods

Demand for some products does not fluctuate based on income. These items, called Giffen goods, are staple items that most people purchase on a regular basis. There are few or no alternatives, with very little variability in price or quality. As a result, demand stays stable regardless of income. Examples include things like milk, bread, butter, flour, and sugar. People of all income levels tend to purchase and use Giffen goods. Demand for such items is constant.

Luxury Goods

The most affluent people tend to prefer luxury goods, such as high-end cars, designer apparel and original art. Demand for luxury goods is closely linked to income. People generally purchase these when they have a high level of disposable income. High-income consumers often purchase luxury items. People who ordinarily purchase normal or inferior goods may sometimes splurge on an occasional luxury item as a treat, or as a result of coming into an unexpected financial windfall. During difficult economic times, demand for luxury goods will plummet.

Explore Economics

Now that you understand the difference between a normal good vs. inferior good, consider further exploring key economic concepts. Start by exploring some basic economic terms and what they mean.