what are normal goods 
normal goods are consumer products such as food and clothing that exhibit a direct relationship between demand and income as a consumer s income rises the demand for normal goods also increases understanding normal goodsa normal good or necessary good doesn t refer to the quality of the good but rather the level of demand for the good and its relationship to the increases or decreases of a consumer s income level demand for normal goods is determined by patterns of consumer behavior and as income levels rise consumers can often afford goods that were not previously available to them examples of normal goods include income elasticity of demandnormal goods have a positive income elasticity of demand where a change in demand and a change in income move in the same direction income elasticity of demand measures the magnitude with which the quantity demanded changes in reaction to a change in income it is used to understand changes in consumption patterns that result from changes in purchasing power income elasticity change in quantity purchased change in income begin aligned text income elasticity frac text change in quantity purchased text change in income end aligned income elasticity change in income change in quantity purchased a normal good has an income elasticity of demand that is positive but less than one if the demand for blueberries increases by 11 percent when income increases by 33 percent then blueberries have an income elasticity of demand of 0 33 or 11 33 blueberries qualify as a normal good economists use the income elasticity of demand to determine whether a good is a necessity or a luxury item companies also analyze the income elasticity of demand for their products and services to help forecast sales in times of economic expansions resulting in rising incomes or during economic downturns and declining consumer incomes normal goods vs inferior goodsinferior goods are the opposite of normal goods inferior goods are goods whose demand drops as consumers incomes rise as an economy improves and wages rise consumers will prefer a more costly alternative to inferior goods the term inferior doesn t refer to the quality but affordability public transportation tends to have an income elasticity of demand coefficient that is less than zero meaning that its demand falls as income rises classifying public transport as an inferior good most people prefer to drive a car if given a choice and can afford it inferior goods include all of the goods and services that people purchase only because they cannot afford higher quality substitutes normal goods vs luxury goodsluxury goods commonly have an income elasticity of demand that is greater than one and include items like expensive cars vacations fine dining and gym memberships consumers tend to spend a greater proportion of their income on luxury goods as their income rises whereas people spend an equal or lesser proportion of their income on normal and inferior goods as their income increases example of a normal goodjack earns 3 000 per month and spends 40 of his income on food and clothing or 1 200 per month if his income rises to 3 500 per month for a 16 increase in income jack can afford more so he may increase his purchases or demand for food and clothing to 1 320 per month for a 10 increase or 1 320 1 200 1 200 x 100 food and clothing are considered normal goods for jack because he increased his purchases by 10 when he realized a 16 raise his income elasticity of demand is 625 or 10 16 since food and clothing have an income elasticity of demand of less than one jack s food and clothing are normal goods 