Ordinary good

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In economics, and especially in microeconomics, a normal good is a class of goods that is differentiated from others by the fact that demand for them changes in a specific way after a change in the consumer's income. Their specific distinguishing feature is controversial in the literature.

definition

This article is based on the following - probably the most common - definition of a normal good:

Definition: A good is described as normal if its demand increases (in absolute terms) with increasing income. It is called inferior , when demand decreases (absolute).

Different definitions

Some of the literature makes other distinctions in deviation from the above definition. For an overview, reference is made to the main article mentioned.

properties

Adding the definition of income elasticity , a good is normal if and only if the income elasticity is positive.

It should be noted that the characterization of a good as normal or inferior is not firmly linked to a good, but always depends on the external circumstances (absolute income level, prices, preferences). The same good can therefore easily represent a normal good with a low income, but turn into an inferior good above a certain income level.

example

  • With an income of 1000 euros, simple supermarket bread is consumed for 10 euros per month. After the income has risen to 2,000 euros, people buy more bread from the bakery across the street and the consumption of simple bread drops to 3 euros. In this example, simple supermarket bread is an inferior good.
  • With an income of 1000 euros, 30 euros per month are spent on cinema tickets. After the income has risen to 2000 euros, the expenses for cinema tickets rise to 45 euros. So income has risen and spending on going to the cinema has also increased. The cinema aisles are a normal good in this example .

See also

literature

  • Friedrich Breyer: Microeconomics. An introduction. 5th edition. Springer, Heidelberg a. a. 2011, ISBN 978-3-642-22150-7 .
  • Geoffrey A. Jehle and Philip J. Reny: Advanced Microeconomic Theory. 3rd ed. Financial Times / Prentice Hall, Harlow 2011, ISBN 978-0-273-73191-7 .
  • N. Gregory Mankiw and Mark P. Taylor: Fundamentals of Economics. 4th edition. Translated by Adolf Wagner and Marco Herrmann. Schäffer-Poeschel, Stuttgart 2008, ISBN 978-3-7910-2787-6 .
  • Andreu Mas-Colell, Michael Whinston, and Jerry Green: Microeconomic Theory. Oxford University Press, Oxford 1995, ISBN 0-195-07340-1 .
  • Hal Varian : Microeconomic Analysis. WW Norton, New York and London 1992, ISBN 0-393-95735-7 .
  • Hal Varian : Intermediate Microeconomics. A modern approach. 8th edition. WW Norton, New York and London 2010, ISBN 978-0-393-93424-3 .

Individual evidence

  1. Cf. in particular the standard works in common use worldwide Varian 2010, p. 143 ff .; Mas-Colell / Whinston / Green 1995, p. 25 and Mankiw 2008, p. 79 f .; also, inter alia, Varian 1992, p. 117; Jehle / Reny 2011, p. 56; Breyer 2011, p. 143.
  2. Unfortunately, this is also inconsistent. It is usually defined by, cf. the article income elasticity .