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 normal, inferior or sticky.

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

References

Hal Varian, Intermediate Microeconomics: A Modern Approach, Sixth Edition, chapter 6

Types of goods

Public goods Private goods (includes household goods) Common goods Common-pool resource Club goods Anti-rival goods Global public goods Global commons

(Non-)Rivalrous goods and (Non-)Excludable goods

Complementary goods vs. Substitute goods vs. Independent goods

Free goods vs. Positional goods

(Non-)Durable goods Intermediate goods (producer goods) Final goods Capital goods

Inferior goods Normal goods (Necessity goods) Neutral goods Ordinary goods Giffen goods Luxury goods Veblen goods Superior goods

Search goods (Post-)Experience goods Credence goods

Merit goods Demerit goods

Damaged goods Composite goods Intangible goods

This article is issued from Wikipedia - version of the 12/17/2013. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.

Ordinary good

Distinction between income and price effects

See also

References