Normal and Inferior Goods - 21 |
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All normal goods have positive elasticities of demand; the elasticity of the
good is > 1. For some goods (like petrol), the price elasticity of demand will be
very close to zero; but it will be greater than zero - some decrease in demand for petrol
will result if price rises.
Inferior goods have negative elasticities of demand. As income rises, the
quantity demanded actually falls.
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