Inferior goods clarificationx
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- Опубликовано: 29 ноя 2024
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More clarification on inferior and normal goods
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People just didn't listen to the last video carefully, you've explained it absolutely clearly in my opinion >.
Great, helped me with my Economics A level!
I wasn't confused.ibn fact the last video made so much sense.I got lost in lecture yesterday on this topic.maybe my lecturer was just boring.wish he had your upbeat tone!!
Inferior or normal is all based on individual preference, and does not relate to quality of the good as the terminology suggests. Inferior goods however, tend to be cheaper goods and low quality does go hand in hand with that. But it truly is all individual preference which is what micro is all about. An inferior good for me may be normal for you, and a normal good can become an inferior good or Giffen Good (only good with upward sloping demand). SPAM canned meat product is a good example. Most people find it disgusting, and would purchase less and less SPAM at higher income levels, or ramen noodles for instance, making these inferior goods. However, in Hawaii, SPAM is a delicacy, so to most Hawaiians, SPAM is a normal good.
He does say exactly that with a different example. He says the example of the car only works in a fully developed country where everyone has a car, of course if we were to be talking about India it would be a huge privilige for many families to have the Yugo car...
A few additional things can be said (or clarified):
1) this happens assuming that the total number of cars to be sold is constant. If that is the case and one of the options gains demand, some other option must lose demand
2) the same thing will happen to the most expensive car if income goes down. Is there a term for this such as "superior goods"? The term i suspect has to do not with the quality of the product but with the place in the price hierarchy
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I think when an individuals incomes increases and he goes for other products, that means the products he rejected is inferior to the individual.
no, inferior goods are not low quality high quantity goods, it is a relative concept, any good that u cannot purchase within your current income that u desire to purchase will be a normal good for eg - if the price of a rado watch is out of your range, if your income rises, your demand for the watch will be possible as now u can purchase it too therefore, its demand will rise. however, if your were buying say a cheaper watch earlier because your current income restricted ur purchase to that good, if your income rises, since you will be able to purchase a better watch, the watch u were gonna purchase earlier will become an inferior good for you. In short, those goods of which the income effect on the demand of the good is negative ( income rises, demand falls) are termed as inferior goods whereas those goods of which the income effect on the demand of that good is positive ( income rises, demand increases ) are termed as normal goods. hope this helps :)
Sheenabh Dhar No, that's not how it works.
While you're right in the second part stating the definition of the goods. The original example doesn't concur with that thought as it is a generalization of the population not taken from specific scenarios. There are specific scenarios that will prevent you from being able to buy the better good even though your income went up, but that's because of sunk costs.
@joseluiscampanello in his first video in the microecon series he stated that these examples should assume ceteris paribus. He's just trying to enable our conceptualization a base economic principles. Everything you said is true- but it beyond the purpose of this video.
Can you give an explanation about Giffen goods as well?? Cause its a bit confusing for me. Pleaseeeeee 🥺🙌
@NewOrleansboii Pay may go up (in general) but other expenses may also rise. Utilities, insurance, rent.... cost of living.
Just because your pay increases it does not mean you have more disposable income. My last two pay raises went to health insurance premium increases. My net income may be higher but my gross pay is the same. At the same time goods I need like food have risen so there is less disposable income or income to set aside or save for a normal/superior good.
[comes from previous comment]
3) *IN* this case, the shape of the curve for the lowest car (the Yugo) will probably change in addition to being shifted. Some people will probably be able to afford buying a car for their teens. If this were the case, "total demand" will go up (more cars sold) and the "inferior good" perhaps will respond more like a normal good
A better example would be canned foods, cheap noodles etc.
What we don't think about in this video are the people poorer than the poor who can't afford a car at all. Including this then the cheapest car doesn't have to be inferior at all. However food is a necessity and even the poorer on the left side of this bar will have to buy. Then those foods are a much more inferior good than a cheap car.
never thought I'd see a Rolls Royce in a Khanacademy video.
Very well explained
Actually it's often the rich that drive beaters.
It's not often. There is a small tendency for rich people to drive beaters, but most drive better cars and or luxury cars. One thing is for sure. You won't see a poor person driving a supercar!
On the second car you made a mistake because as you increase the location on the price axis, demand actually decreases for a small section of the curve at the high end, and increases for the larger portion.
@williamjpiano yes it does, but for the simplicity of explanation of what an inferior good is, in the video everybody already could afford at least a cheap car.
8th Generation Accord sedan is a Full size Sedan not a medium sized :P :P
Just explained why Wal-Mart is so popular.
Interesting video
Your videos are getting me through business school! Keep them coming boss, as your the fucking man Kahn!
When income increases, doesn't it mean people who previously cannot afford cars can buy the cheap cars? so the total demand of everything increases since there is greater purchasing power.
But he assumed that this was a story of a developed country where everyone owns a car. And then there was increase in income.
Can you explain how large assets, like a sports franchise, are bought and sold? I keep hearing about how baseball teams in particular are given to a group with the largest buying power, but money doesn't necessarily change hands. Which is something I don't understand at all.
Or a 10 year old Honda = New Yugo. Or Incomes go up prices go up and nothing changes.
thank you
THAT NICE VIDEO BRO THAT ROLLS ROYCE RULES ON YOUR VIDEO
poor people dont have cars...
Hey what software do you do your vids with?
But if Income goes up in most of all jobs in general, won't the price of the cars go up as well?
@ShwangShwing or accommodations for bicycles ;).
There are a few things that i think can be even clarified:
Microeconomics!! yaay :D
Those cars look all terrain
@DoNotLaughAtMe I'll take that as a no, then.
and gathers debt. yay!
Nano is failure in India it's world cheapest car but that's why it fail
Everyones wants to have Yugo, don’t be stupid
Again he is talking from the pointview of developed countries not semi developed I assume from your name you are from... he states that very clearly in the video
yugo :-D