Engel Curve (Normal and Inferior Goods)
The Engel Curve illustrates how the quantity demanded of a good changes as consumer income changes, distinguishing between normal and inferior goods.
engel curve
Engel Curve: Illustrates how the quantity demanded of a good changes in response to changes in consumer income.
normal goods
Normal Goods: Demand increases with rising income. Represented by the upward-sloping section of the curve.
inferior goods
Inferior Goods: Demand decreases with rising income. Represented by the downward-sloping section of the curve.
The curve shows the relationship between a consumer's income and the quantity of a good they purchase.
For normal goods, as income increases, quantity demanded also increases — shown by the upward-sloping section of the curve below income level 30.
For inferior goods, quantity demanded decreases as income increases — seen in the downward-sloping section above income level 30.
Goods may switch from being normal to inferior at a certain income threshold, depending on consumer preferences.
Understanding Engel curves helps policymakers and businesses predict changes in demand as income levels shift across the economy.
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