Normal, Luxury and Inferior goods

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Luxury goods:

also fall into the category of normal goods but tend to be more sensitive in changes in real income. If incomes increases, demand for gym memberships booms; if incomes fall many people quickly cancel their gym memberships in an attempt to save money.

Inferior goods:

Are those goods that have negative income elasticity demand - demand rises when real income falls. Supermarket own-label products are a good example of inferior goods.

Normal goods:

As customers incomes increases, the demand in normal good rises. But if customers income decreases, the demand in normal good decreases.


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