Superior good
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Superior goods make up a larger proportion of consumption as income rises, and as such are a type of normal goods in consumer theory.
The income elasticity of a superior good is above one by definition, because it raises the expenditure share as income rises.
A superior good might be a luxury which isn't purchased at all below a certain level of income, or have a wide quality distribution, such as wine, and holidays (where the number produced may stay constant with rising wealth, but the level of spending goes up, to secure a better experience.)
Confusion with normal goods
The choice of the word "Superior" to define goods of this type suggests that they are the antonym of "Inferior goods", but this is misleading; An inferior good can never be a superior good, but many goods are neither. If the quantity of an item demanded increases with income, but not enough to increase the share of the budget spent on it, then it is a normal good.Some texts on microeconomics use the term Superior goods as an inferior goods antonym, making "Superior goods" and "Normal goods" synonymous. Where this is done, a product making up an increasing share of spending under income increases is often called an Ultra-superior good.
External links
- [Definition of superior good from the elasticity perspective] from the University of Michigan
- [Definition of "superior good" as a "normal good" synonym] from California State University
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