Changes in Income Normal goods a Good X is a normal good if an increase(decrease)in income leads to an increase( decrease)in its consumption Inferior goods Good X is a inferior good if an increase(decrease)in income leads to an decrease(increase)in its consumption Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Changes in Income • Normal Goods  Good X is a normal good if an increase (decrease) in income leads to an increase (decrease) in its consumption. • Inferior Goods  Good X is a inferior good if an increase (decrease) in income leads to an decrease (increase) in its consumption