What is the difference between good quality chocolate and cheap chocolate?
The short answer is that good quality chocolate has a high proportion of cocoa constituents with little or no substitution.

What to look for:


High cocoa solids content. Chocolate with less than 50% cocoa solids will have little real chocolate taste and those with more than 70% will have a much more complex and fine chocolate taste.
Cocoa butter content. Chocolate makers tend to substitute vegetable oil in place of cocoa butter to reduce costs. Cocoa butter prices have increased in recent years due to demand in the cosmetics industry.
Smooth texture. This comes from the cocoa spending a longer period being crushed in the concher.


Conversely, these are indications of a poor quality chocolate:


Low proportion of cocoa solids
Use of vegetable oil instead of cocoa butter


Chocolates with low cocoa solids content, such as milk chocolate, are usually inappropriate for baking due to their proportionally low chocolate flavor. Baking cocoa powder itself is in fact just another word for cocoa solids, and this is why it is favored when baking: it is the pure chocolate flavor.

The milk constituents of milk chocolate may also go rancid, giving the chocolate a'bad olive oil' taste as described here.



In this image the cocoa solids go up from 0% in white chocolate to a maximum of 100% in the highest of quality chocolates.

As white chocolate contains no cocoa solids, look instead for cocoa butter and vanilla in place of vegetable oils and vanilla extract.