Answer to Question #54531 in Macroeconomics for rickhy

Question

With diagrams and clear explanation explain that a good can be both normal and inferior.

Answer 1

One example I can think of is the Toyota Corolla. I imagine demand would increase directly with income for a a while. At a high enough income, status would kick in, and people would cease to buy the Corolla, meaning demand would seem to decrease as income increases.
Someone with a low income might aspire to buy a Corolla (normal good) but beyond some income level they view the Corolla as an inferior good because the want a Camry or Lexus instead.. That fact that you understand that a single good can be inferior or normal depending on the income level is excellent.