Question

Could you explain the two concepts of inferior good and normal good? Substitution and complementary good. ?

Answer 1

Normal goods: These goods can be defined as those whose quantity demanded rises as the consumer's income rises and falls as the consumer's income falls. For example, cars. As income rises, quantity demanded of cars rise.

Inferior goods: These goods can be defined as those whode quantity demanded falls with a rise in income and rises with a fall in income. Eg : Coarse grains. People will reduce the consumption of course grains and move to better quality food grains when their income rises.

Substitutes: Substitutes are goods that a consumer percieves as similar so that having more of one commodity makes them desire less of the other commodity. For example: pen and pencil, petrol and diesel

Complementary goods: These are goods that literally complement each other. They cannot be used independently. Thus, their demands are always related. For example, petrol and car