Normal good

In economics, a normal good is a type of a good for which consumers increase their demand due to an increase in income, unlike inferior goods, for which the opposite is observed. When there is an increase in a person's income, for example due to a wage rise, a good for which the demand rises due to the wage increase, is referred as a normal good. Conversely, the demand for normal goods declines when the income decreases, for example due to a wage decrease or layoffs.

Whether a good is categorized as a normal good or an inferior good is based on empirical observations, not some essential element of a good. Indeed, the same good may be a normal good for one group of consumers and an inferior good for another group. For example, for moderate-income consumers, a BMW 3 Series car might be a normal good, but for an upper-income group, it might be an inferior good.

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