Economic Goods


  • Normal Good Ordinary Good
  • Giffen Good Inferior Good

Depending on Price and Quantity Demanded

  • Ordinary Good: Follows the Law of Demand:
  • Giffen Good:
    • ⇒ Cause: Income Decrease ⇒ Buy cheaper Giffen Good
    • Irish Famine. the price of potatoes and meat increased subsequently. Compared to meat, potatoes could be much cheaper as a staple food.
      • ⇒ Potatoes were a Giffen Good

Depending on Income and Quantity Demanded


  • YED:= Income elasticity of demand-
  • Income Effect (IE) is important in understanding economic goods
  • Normal Good:
    • i.e. (derivative from Marshallian Demand)
    • Necessity Good (Necessities)
    • Luxury Good
      • …i.e. a normal good for which the proportional consumption increase exceeds the proportional Increase
  • Inferior Good:
    • i.e.
  • Quasilinear Good: doesn’t change on income change
    • i.e.

For the set of all goods we can thus show the following Venn diagram:

Game Theory Goods

  • Common-pool resources are also called Common Goods.
  • Public Goods
    • The production of a public good is a Prisoner’s Dillemma situation.
    • Basic examples: national defense, street lighting, a good schooling district, etc.