Explain the Difference Between Inferior and Normal Goods

question 43

Essay

Explain the difference between inferior and normal goods. As a developing economy experiences increases in income (measured by GDP), what would you predict to happen to demand for inferior goods?

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Definitions:

New Venture

Refers to a newly established business entity created with the intention of entering a market.

Opportunity Cost

The financial loss involved in not selecting the subsequent top preference during the decision-making process.

Cash Flow Estimate

An approximation of the amount of money expected to move in and out of a business within a specific time period.

Time Value of Money

Calculations involving the present and future values of money under the action of compound interest. Also called discounted cash flow.