An ordinary good is a
microeconomic concept used in
consumer theory. It is defined as a
good which creates an increase in quantity demanded when the price for the good drops or conversely a decrease in quantity demanded if the price for the good increases, ''
ceteris paribus''. It is the opposite of a
Giffen good.
Since the existence of Giffen goods outside the realm of economic theory is still contested, the pairing of Giffen goods with ordinary goods has gotten less traction in economics textbooks than the pairing
normal good/
inferior good used to distinguish responses to income changes. The usage of "ordinary good" is still useful since it allows a simple representation of price and income changes. A normal good is always ordinary, while an ordinary good can be normal, inferior or sticky.
Distinction between income and price effects
See also
*
Supply and demand
In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris_paribus#Applications, holding all else equal, the unit price for a particular Good (economics), good ...
*
Consumer theory
*
Giffen good
*
Inferior good
*
Normal good
*
Capital good
Capital and its variations may refer to:
Common uses
* Capital city, a municipality of primary status
** Capital region, a metropolitan region containing the capital
** List of national capitals
* Capital letter, an upper-case letter
Econ ...
References
*
Hal Varian, ''Intermediate Microeconomics: A Modern Approach, Sixth Edition'', chapter 6
Goods (economics)
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