F Distinguish between Normal and Inferior goods, explain Giffen and Veblen goods Flashcards Preview

L1 14 Demand and Supply Analysis: Consumer Demand > F Distinguish between Normal and Inferior goods, explain Giffen and Veblen goods > Flashcards

Flashcards in F Distinguish between Normal and Inferior goods, explain Giffen and Veblen goods Deck (5)
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1
Q

Normal Good (+income effect)

A

QgoodX increases

2
Q

Inferior good (-income effect)

A

QgoodY increases

3
Q

Giffen Good

A

-Inc effect > +Sub effect , when price falls

Upward sloping demand curve

At lower prices, a small quantity would be demanded

4
Q

Veblen Good

A

Higher P makes the good more desirable

Idea: Consumer gets utility from consuming a good that seems to have high status

5
Q

Distinctions between Giffen and Veblen goods

A

Giffen goods are inferior (-Inc effect) and the theory is supported by rules of consumer choice

Veblen goods not supported by rules of consumer choice and the good is not negative income effect.