Inferior goods clarificationx

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More clarification on inferior and normal goods

Microeconomics on Khan Academy: Topics covered in a traditional college level introductory microeconomics course

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People just didn't listen to the last video carefully, you've explained it absolutely clearly in my opinion >.<

SpRkx

Great, helped me with my Economics A level!

TopGearrules

Can you give an explanation about Giffen goods as well?? Cause its a bit confusing for me. 🥺🙌

abigailvenuki

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

[continued in next comment]

joseluiscampanello

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!!

marlinabasir

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.

FXFXFXFX

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 :)

sheenabhdhar

@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.

deadman

@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.

timfwater

Your videos are getting me through business school! Keep them coming boss, as your the fucking man Kahn!

chazrivera

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.

Melthornal

[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

joseluiscampanello

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.

ChallengerJunky

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.

williamjpiano

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.

maynen