SA. Construct a market diagram for Ramen Noodles. Analyze the effect in the market if overall there is an increase in household income and households consider Ramen Noodles to be an inferior good. 58. Construct a market diagram for powder milk. Analyze the effect in the market if overall there is a decrease in household income and households consider powder milk to be an inferior good.

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Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.