This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Are all goods the same? Is more always better? Up to this point, we have been assuming that when we have more money, or feel like we have more money, we will tend to buy more goods. It makes sense: the more money we have, the more we buy. If we have less money, or if the price goes up, however, we tend to buy less. Because this is usually the case, we call such goods normal goods. If you buy more of a good when you have more money, that good is a normal good. If the price of a normal good increases, you buy less. There are some exceptions, however: not all goods are normal goods. For instance, if an increase in your income causes you to buy less of a good, that good is called an inferior good. For instance, "poor college students" often satisfy themselves with generic soda and cheap ramen. When they get jobs and a steady income, however, they might soda and cheap ramen....
View Full Document
This note was uploaded on 12/13/2011 for the course ECO 1320 taught by Professor Staff during the Fall '11 term at Texas State.
- Fall '11