A list of different types of economic goods.
Income Elasticity of Demand and types of Goods
Income elasticity of demand measures the responsiveness of demand to a change in income.
- Definition Inferior Good: An inferior good means an increase in income causes a fall in demand. It has a negative YED. An example, of an inferior good is Tesco value bread. When your income rises you buy less Tesco value bread and more high quality, organic bread.
- Definition Normal Good. This means an increase in income causes an increase in demand. It has a positive YED. Note a normal good can be income elastic or income inelastic.
- Definition Luxury Good. A luxury good means an increase in income causes a bigger % increase in demand. It means that the YED is greater than one. For example, high Definition TV’s would be luxury. When income rises, people spend a higher % of their income on the luxury good. (Note: a luxury good is also a normal good, but a normal good isn’t necessarily a luxury good)
Other Types of Goods
- Complementary Goods. Goods which are used together, e.g. TV and DVD player. see: Complementary goods
- Substitute Goods. Goods which are alternatives, e.g. Pepsi and coca-cola. See Substitute goods.
- Giffen Good. A rare type of good, where an increase in price causes an increase in demand. The reason is that the income effect of a rise in the price causes you to buy more of this cheap good because you can’t afford more expensive goods. For example, if the price of wheat rises, a poor peasant may not be able to afford meat any more, so has to buy more wheat. See: Giffen goods
- Veblen / Snob Good. A good where an increase in price encourages people to buy more of it. This is because they think more expensive goods are better. See: Veblen good
Market Failure
- Public Goods – goods with characteristics of non-rivalry and non-excludability, e.g. national defense. See: Public goods
- Merit Goods. Goods which people may underestimate benefits of. Also often has positive externalities, e.g. education. See: Merit goods
- Demerit Goods. Goods where people may underestimate costs of consuming it. Often has negative externalities, e.g. smoking, drugs. See: Demerit goods
- Private goods – goods which do have rivalry and excludability. The opposite of a public good See: Private goods
- Free Goods – A good with no opportunity cost, e.g. breathing air.
what is different goods?
Thanks diamondlyrgirl very helpfull and clear explanation
yes this was really nice explained …
@Anonymous: Complementary goods are goods that go together – for example, coffee and sugar, if the demand for coffee increases, the demand for sugar will increase as well. Because some people consume them together.
As for substitute goods, these are the products that compete each other’s demand. Like Coke and Pepsi, if the demand for Coke(the drink not other Coke…) increases which might be caused by a decrease in the price of Coke or an advertisement or any other causes, the demand for Pepsi decreases because people don’t consume two sodas together.
what about supplementary goods?? what do you mean by this??can you please answer it and give some examples…thank you
That was a good explanation on the types of goods wid nice Egs.
I agree with Wasi. Thanks for the help.. but what are complementary and sustitute goods?
can some1 help me on hw to tackle Economics questions lyk the writing skills,tips and etc coz i find t hard sometimes?
the categories of Good
i need to know the different type of Goods in economy by description how it is divided ? from which perspective
1.i need some examples of luxurious goods and normal goods
2.the differences between luxurious goods and normal goods.[5]
,,i need more information about economics goods and examples of types of goods,,,