Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: MrLeRoy; JmyBryan
Elasticity as a trait, shows that demand almost increases with greater availability.

GIFFEN GOOD: A rare type of good seldom seen in the real world, in which a change in price causes quantity demanded to change in the same direction (in violation of the law of demand). In other words, an increase in the price of a Giffen good results in an increase in the quantity demanded. The existence of a Giffen good requires the existence of special circumstances. First, the good must be an inferior good. Second, the income effect triggered by a change in price must overwhelm the substitution effect. A Giffen good is most likely to result when the good is a significant share of the consumer's budget.
c/o www.amosweb.com

Does not apply.
206 posted on 03/06/2003 12:45:11 PM PST by unspun ("Inalienable right to own hash, PCP, ricin, C4, smallpox & plutonium." - TOTALIBERTARIAN)
[ Post Reply | Private Reply | To 201 | View Replies ]


almost always increases
207 posted on 03/06/2003 12:47:07 PM PST by unspun ("Inalienable right to own hash, PCP, ricin, C4, smallpox & plutonium." - TOTALIBERTARIAN)
[ Post Reply | Private Reply | To 206 | View Replies ]

To: unspun
Elasticity as a trait, shows that demand almost always increases with greater availability.

Not quite; elasticity measures by how much demand increases. JmyBryan points out that elasticity is most likely low for drugs.

GIFFEN GOOD: A rare type of good seldom seen in the real world, in which a change in price causes quantity demanded to change in the same direction (in violation of the law of demand). In other words, an increase in the price of a Giffen good results in an increase in the quantity demanded. The existence of a Giffen good requires the existence of special circumstances. First, the good must be an inferior good. Second, the income effect triggered by a change in price must overwhelm the substitution effect. A Giffen good is most likely to result when the good is a significant share of the consumer's budget. c/o www.amosweb.com

Does not apply.

That doesn't follow. "Seldom" is not "never," and "is most likely to" is not "only."

225 posted on 03/06/2003 1:17:20 PM PST by MrLeRoy ("That government is best which governs least.")
[ Post Reply | Private Reply | To 206 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson