Hi I'm Dr. Sangarallngam Ramesh.
Welcome to this Henry Stewart talks,
here is Introduction to Microeconomics talk number 7.
In this talk we'll be analyzing the different types of goods which economists define,
and how demand and supply for good will depend on the nature of the good itself,
in other words the type of the good.
So why do economists classify goods into different types?
So because the demand for goods can
change due to price factors or non-price factors as we've
seen and for example true non-price factors are
change in consumers income or change in the distribution of income.
How demand for good is affected,
ceteris paribus which simply means all other factors are unchanged except
the income of the consumer or the distribution of
all the consumer will depend on the type of the good.
Economists classify goods into four different types,
not based on their intrinsic properties,
in other words the quality of the good or other factors related to the good,
but simply on how demand would change when the income level changes.
So in this case consumers define and analyze
consumer and firm behavior with respect to
four different types of goods and these are normal goods,
inferior goods, giffen goods and veblen goods.
So in the case of a normal good,