question_answer

Differentiate between normal goods and inferior goods? Or What do you understand by the rightward shift in the demand curve? Explain it with the help of an example and diagram.

Answer:

Difference between normal goods and inferior goods are:

Basis	Normal Goods	Interior Goods
Income effect	Income effect is positive	Income effect is negative.
Essential to life	Normal goods may or may not be essential to life.	Inferior goods are generally essential to life due to which only they are demanded even being inferior.
Law of demand	These goods obey law of demand.	These goods may or may not obey law of demand.

Due to changes in factors other than the price of the commodity concerned, if more quantity at the same Price is demanded, then it is termed as increase in demand and is represented by the rightward shift in the demand and curve.                                                                                         Increase in demand can be explained better with the below mentioned example and diagram:

Price (Rs.)	Quantity Demanded (units)
10	10
10	25

            As it is clear from the above schedule that at the same price of Rs. 10, demand has increased from 20 to 25 units. Quantity demanded (units) Demand Curve: Increase in Demand In given diagram, demand increases from 00 to 00i at the same price OP.