Information about Ordinary Good
An ordinary good is a microeconomic concept used in consumer theory. It is defined as a good which creates increased demand when the price for the good drops or conversely decreased demand if the price for the good increases, ceteris paribus. It is the opposite of a Giffen good.
Since the existence of Giffen goods outside the realm of economic theory is still contested, the pairing of Giffen goods with ordinary goods has gotten less traction in economics textbooks than the pairing normal good/inferior good used to distinguish responses to income changes. The usage of "ordinary good" is still useful since it allows a simple representation of price and income changes. A normal good is always ordinary, while an ordinary good can be either normal or inferior.
In economics the term common good is used to refer to rivalrous and non-excludable goods. One of the most common ways of looking at goods in economics, illustrated in the table below, is the classic division based
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Since the existence of Giffen goods outside the realm of economic theory is still contested, the pairing of Giffen goods with ordinary goods has gotten less traction in economics textbooks than the pairing normal good/inferior good used to distinguish responses to income changes. The usage of "ordinary good" is still useful since it allows a simple representation of price and income changes. A normal good is always ordinary, while an ordinary good can be either normal or inferior.
Distinction between income and price effects
| Income change | Price change | |||||
| Normal good | Inferior good | Ordinary good | Giffen good | |||
| Income up | Consumption up | Consumption down | Price up | Consumption down | Consumption up | |
| Income down | Consumption down | Consumption up | Price down | Consumption up | Consumption down | |
See also
References
- Hal Varian, Intermediate Microeconomics: A Modern Approach, Sixth Edition, chapter 6. summary.
| Types of goods
public good - private good - common good - common-pool resource - club good - anti-rival goods
inferior good - normal good - ordinary good - Giffen good - luxury good - Veblen good - superior good search good - (post-)experience good - merit good - credence good - demerit good |
Microeconomics (or price theory) is a branch of economics that studies how individuals, households, and firms make decisions to allocate limited resources,[1] typically in markets where goods or services are being bought and sold.
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Consumer theory is a theory of economics. It relates preferences (through indifference curves and budget constraints) to consumer demand curves. The models that make up consumer theory are used to represent prospectively observable demand patterns for an individual
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Good may refer to:
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- Good and evil, in religion, ethics, and philosophy
- Good (economics and accounting), a useful object or service
- Good Technology, a company which sells Push e-mail products for mobile phones
- Form of the Good in Platonic philosophy
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Cēterīs pāribus is a Latin phrase, literally translated as "with other things [being] the same," and usually rendered in English as "all other things being equal.
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A Giffen good is an inferior good for which a rise in its price makes people buy even more of the product as a consequence of the income effect. Evidence for the existence of Giffen goods is limited, but there is an economic model that explains how such a thing could exist.
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In economics, normal goods are any goods for which demand increases when income increases, i.e. with a positive income elasticity of demand. The term does not necessarily refer to the quality of the good.
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In consumer theory, an inferior good is a good that increases in demand when the consumers income falls, unlike normal goods, for which the opposite is observed. Inferiority, in this sense, is an observable fact rather than a statement about the quality of the good.
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In economics, normal goods are any goods for which demand increases when income increases, i.e. with a positive income elasticity of demand. The term does not necessarily refer to the quality of the good.
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In consumer theory, an inferior good is a good that increases in demand when the consumers income falls, unlike normal goods, for which the opposite is observed. Inferiority, in this sense, is an observable fact rather than a statement about the quality of the good.
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A Giffen good is an inferior good for which a rise in its price makes people buy even more of the product as a consequence of the income effect. Evidence for the existence of Giffen goods is limited, but there is an economic model that explains how such a thing could exist.
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supply and demand describe market relations between prospective sellers and buyers of a good. The supply and demand model determines price and quantity sold in the market.
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Consumer theory is a theory of economics. It relates preferences (through indifference curves and budget constraints) to consumer demand curves. The models that make up consumer theory are used to represent prospectively observable demand patterns for an individual
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A Giffen good is an inferior good for which a rise in its price makes people buy even more of the product as a consequence of the income effect. Evidence for the existence of Giffen goods is limited, but there is an economic model that explains how such a thing could exist.
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In consumer theory, an inferior good is a good that increases in demand when the consumers income falls, unlike normal goods, for which the opposite is observed. Inferiority, in this sense, is an observable fact rather than a statement about the quality of the good.
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In economics, normal goods are any goods for which demand increases when income increases, i.e. with a positive income elasticity of demand. The term does not necessarily refer to the quality of the good.
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In economics, capital goods, in contrast to consumer goods, are goods used in the production of (physical) capital. Capital goods refer to real products that are utilized in the production of other products but are not incorporated into the other products themselves.
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A good or commodity in economics is any object or service that increases utility, directly or indirectly, not to be confused with good in a moral or ethical sense (see Utilitarianism and consequentialist ethical theory).
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public good is a good that is non-rival and non-excludable. This means that consumption of the good by one individual does not reduce the amount of the good available for consumption by others; and no one can be effectively excluded from using that good.
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A private good is defined in economics as a good that exhibits these properties:
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- Excludable - it is reasonably possible to prevent a class of consumers (e.g. those who have not paid for it) from consuming the good.
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For the philosophical term, see .
In economics the term common good is used to refer to rivalrous and non-excludable goods. One of the most common ways of looking at goods in economics, illustrated in the table below, is the classic division based
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A common-pool resource (CPR), alternatively termed a common property resource, is a particular type of good consisting of a natural or human-made resource system, the size or characteristics of which makes it costly, but not impossible, to exclude potential beneficiaries
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Club goods (also known as collective goods) are a type of good in economics, sometimes classified as a subtype of public goods that are excludable but non-rivalrous, at least until reaching a point where congestion occurs.
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Types of goods public good - private good - common good - common-pool resource - club good - anti-rival goods rivalrous good and non-excludable good complement good vs. substitute good free good vs.
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In economics, a good is considered either rivalrous (rival) or nonrival. Rival goods are goods whose consumption by one consumer prevents simultaneous consumption by other consumers. Most goods, both durable and nondurable, are rival goods. A hammer is a durable rival good.
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Excludability is defined in economics as whether or not it is possible to exclude people who have not paid for a good or service from consuming it. Where it is impossible to prevent an individual who does not pay for that thing from enjoying the benefits of it, the good is termed
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A complementary good or complement good in economics is a good which is consumed with another good; its cross elasticity of demand is negative. This means that, if goods A and B were complements, more of good A being bought would result in more of good B also being bought.
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In economics, one kind of good (or service) is said to be a substitute good for another kind insofar as the two kinds of goods can be consumed or used in place of one another in at least some of their possible uses.
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The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
A good that is made available at zero price is not necessarily a free good.
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A good that is made available at zero price is not necessarily a free good.
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In economics, scarcity is defined as the condition of human wants and needs exceeding production possibilities. In other words, society does not have sufficient productive resources to fulfill those wants and needs.
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Positional goods are products and services whose value is mostly, if not exclusively, a function of their ranking in desirability in comparison to substitutes. The extent to which a good's value depends on such a ranking is referred to as its positionality.
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