Ordinary good: Difference between revisions
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==Definition== | ==Definition== | ||
An '''ordinary good''' is a good satisfying the following equivalent | An '''ordinary good''' is a good satisfying the [[law of demand]], which can be stated in the following equivalent forms: | ||
* Its [[defining ingredient::price elasticity of demand]] is negative (or at least nonpositive). | * Its [[defining ingredient::price elasticity of demand]] is negative (or at least nonpositive). | ||
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* [[Giffen good]]: A good for which the [[price elasticity of demand]] is positive: as the price increases, demand increases. | * [[Giffen good]]: A good for which the [[price elasticity of demand]] is positive: as the price increases, demand increases. | ||
* [[Veblen good]] | |||
Revision as of 21:51, 25 March 2009
This article defines a property of goods: a property that makes sense in the context of a good being bought and sold, and evaluated from the perspective of the buyer, seller, or others affected by it.
View other properties of goods
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Definition
An ordinary good is a good satisfying the law of demand, which can be stated in the following equivalent forms:
- Its price elasticity of demand is negative (or at least nonpositive).
- ceteris paribus, an increase in the price leads to a decrease (or at least no increase) in the quantity demanded.
- ceteris paribus, a decrease in the price leads to an increase (or at least no decrease) in the quantity demanded.
Relation with other properties
Similar properties
- Normal good: A good for which the income elasticity of demand is positive (or, at least, nonnegative): as income increases, demand for the good either increases or stays constant.
Opposite properties
- Giffen good: A good for which the price elasticity of demand is positive: as the price increases, demand increases.
- Veblen good