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Encyclopedia > 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. Microeconomics is one of the main fields of the social science of economics. ... Consumer theory is a theory of economics. ... Good may mean: Look up good in Wiktionary, the free dictionary. ... Ceteris paribus is a Latin phrase, literally translated as with other things [being] the same, and usually rendered in English as all other things being equal. ... A Giffen good is a product for which a rise in price of this product makes people buy even more of the product. ...


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, normal goods are any goods for which demand increases when income increases. ... In consumer theory, an inferior good is a good that decreases in demand when the consumers income rises, unlike normal goods, for which the opposite is observed. ...


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

In economics, normal goods are any goods for which demand increases when income increases. ... In consumer theory, an inferior good is a good that decreases in demand when the consumers income rises, unlike normal goods, for which the opposite is observed. ... A Giffen good is a product for which a rise in price of this product makes people buy even more of the product. ...

See also

The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ... Consumer theory is a theory of economics. ... A Giffen good is a product for which a rise in price of this product makes people buy even more of the product. ... In consumer theory, an inferior good is a good that decreases in demand when the consumers income rises, unlike normal goods, for which the opposite is observed. ... In economics, normal goods are any goods for which demand increases when income increases. ... Capital goods, in contrast to consumer goods, are goods used in the production of (physical) capital. ...

References

  • Hal Varian, Intermediate Microeconomics: A Modern Approach, Sixth Edition, chapter 6. summary.
Types of goods

collective good (social good) - private good - common good - common-pool resource - club good - public good A good in economics is any physical object (natural or man-made) or service that, upon consumption, increases utility, and therefore can be sold at a price in a market. ... In economics, a public good is a good that is hard or even impossible to produce for private profit, because the market fails to account for its large beneficial externalities. ... In economics Private good is an opposite of the public good. ... The common good is a term that can refer to several different concepts. ... The terms common-pool resource (CPR), alternatively termed a common property resource, is a particular type of good, and a natural or human-made resource system, whose size or characteristics of which makes it costly, but not impossible, to exclude potential beneficiaries from obtaining benefits from its use. ... Club goods are a type of goods in economics, sometimes classified as a subtype of public goods, that are non-competetive and excludable. ... In economics, a public good is a good that is hard or even impossible to produce for private profit, because the market fails to account for its large beneficial externalities. ...

rivalrous good and non-excludable good
complement good vs. substitute good
free good vs. scarce good, positional good

durable good - non-durable good - intermediate good (producer good) - final good - consumer good - capital good.
inferior good - normal good - Giffen good - ordinary good - luxury good - Veblen good - superior good
search good - (post-)experience good - merit good - credence good - demerit good In economics, a good is considered rivalrous if its consumption by one person prevents it from being available to others. ... Non-excludable goods are defined in economics as goods whereby it is impossible to stop a person consuming that good when it has become publicly available at a relatively low cost. ... A complement good (or complementary good) is a good that should be consumed with another good. ... 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. ... The free good is a term used in economics to describe a good that is not scarce. ... Scarcity is a central concept in economics. ... A positional good is an intrinsically scarce good whose value is determined by its social context, as opposed to a material good which has innate value. ... A durable good, or a hard good is an economics term for a good which does not quickly wear out, or more specifically; it yields services or utility over time rather than being completely used up when used once. ... A durable good, or a hard good is an economics term for a good which does not quickly wear out, or more specifically; it yields services or utility over time rather than being completely used up when used once. ... Intermediate goods are goods produced by one firm for use in further processing by another firm. ... In economics Final goods are goods that are ultimately consumed rather than used in the production of another good. ... Definitions of consumer goods by Ben Murray New goods acquired by households for their own consumption. ... Capital goods, in contrast to consumer goods, are goods used in the production of (physical) capital. ... In consumer theory, an inferior good is a good that decreases in demand when the consumers income rises, unlike normal goods, for which the opposite is observed. ... In economics, normal goods are any goods for which demand increases when income increases. ... A Giffen good is a product for which a rise in price of this product makes people buy even more of the product. ... In economics a luxury good is a good for which demand increases more than proportionally as income rises, contrast with inferior good and normal good. ... A commodity is a Veblen good if peoples preference for buying it increases as a direct function of its price. ... Superior goods make up a larger proportion of consumption as income rises, and as such are a type of normal goods in consumer theory. ... In economics, a search good is a product or service with easily observable features and characteristics. ... In economics, an experience good is a product or service where product characteristics such as quality or price are difficult to observe. ... A merit good is defined in economics as a good that is under consumed if provided by the market mechanism because individuals typically consider how the good benefits them as individuals rather than the benefits that consumption generates for others in society. ... A credence good is a term used in economics for a good whose utility impact is difficult or impossible to ascertain, unlike experience goods the utility gain or loss is difficult to measure after consumption as well. ... In economics, a demerit good is a good or service that is seen as intrinsically unhealthy, degrading, or socially damaging towards other persons and/or soceity at large once consumed. ...



 

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