normal product

a good or service for which the INCOME-ELASTICITY OF DEMAND is positive, that is, as income rises, buyers purchase more of the product. Consequently, when the price of such a product falls, thereby effectively increasing consumers’ real income, then that price cut will have the INCOME EFFECT of tending to increase quantity demanded. This will tend to reinforce the SUBSTITUTION EFFECT of a price cut, which will cause consumers to buy more of the product because it is now relatively cheaper.

This applies to most products, with the exception of INFERIOR PRODUCTS, where the income effect is negative. See PRICE EFFECT.

单词	normal product
释义	normal product normal product a good or service for which the INCOME-ELASTICITY OF DEMAND is positive, that is, as income rises, buyers purchase more of the product. Consequently, when the price of such a product falls, thereby effectively increasing consumers’ real income, then that price cut will have the INCOME EFFECT of tending to increase quantity demanded. This will tend to reinforce the SUBSTITUTION EFFECT of a price cut, which will cause consumers to buy more of the product because it is now relatively cheaper. This applies to most products, with the exception of INFERIOR PRODUCTS, where the income effect is negative. See PRICE EFFECT.
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