Superior goods make up a larger
proportion of
consumption as
income rises, and as such are a type of
normal goods in
consumer theory.
The
income elasticity of a superior good is above one by definition, because it raises the expenditure share as income rises.
A superior good might be a
luxury which isn't purchased at all below a certain level of income, or have a wide quality distribution, such as
wine, and
holidays (where the number produced may stay constant with rising wealth, but the level of spending goes up, to secure a better experience.)
Confusion with normal goods
The choice of the word "
Superior" to define goods of this type suggests that they are the
antonym of "
Inferior goods", but this is misleading; An inferior good can never be a superior good, but many goods are neither. If the quantity of an item
demanded increases with income, but not enough to increase the share of the
budget spent on it, then it is a
normal good.
Some texts on
microeconomics use the term
Superior goods as an
inferior goods antonym, making "Superior goods" and "Normal goods" synonymous. Where this is done, a product making up an increasing share of spending under income increases is often called an
Ultra-superior good.
External links
- For other uses, see consumption
In economics,
consumption refers to the final use of goods and services to provide utility.
Keynesian economics and aggregate consumption
In Keynesian economics aggregate
consumption..... Click the link for more information. Income, generally defined, is the money that is received as a result of the normal business activities of an individual or a business.
Internationally, the accounting term income is synonymous to term revenue minus expenses.
..... Click the link for more information.
In economics, normal goods are any goods for which demand increases when income increases, i.e. with a positive income elasticity of demand. The term does not necessarily refer to the quality of the good.
..... Click the link for more information.
Consumer theory is a theory of economics. It relates preferences (through indifference curves and budget constraints) to consumer demand curves. The models that make up consumer theory are used to represent prospectively observable demand patterns for an individual
..... Click the link for more information.
In economics, the income elasticity of demand measures the responsiveness of the quantity demanded of a good to the change in the income of the people demanding the good. It is calculated as the ratio of the percent change in quantity demanded to the percent change in income.
..... Click the link for more information.
luxury good is a good for which demand increases more than proportionally as income rises, contrast with inferior good and normal good. Luxury goods are said to have high income elasticity of demand: as people become more wealthy, they will buy more and more of the luxury good.
..... Click the link for more information.
Wine is an alcoholic beverage made from the fermentation of grape juice.[1] The natural chemical balance of grapes is such that they can ferment without the addition of sugars, acids, enzymes or other nutrients.
..... Click the link for more information.
The word holiday has related but different meanings in English-speaking countries. A contraction of holy and day, holidays originally represented special religious days. This word has evolved in general usage to mean any special day of rest (as opposed to regular days of rest such
..... Click the link for more information.
Superior may refer to
- superior (hierarchy), in a hierarchical structure of any kind, a superior is above a subordinate and closer to the apex
- superior is the generic term, and in some cases the formal title, for the head of a monastery or other local unit of a religious
..... Click the link for more information. Antonyms, from the Greek anti ("opposite") and onoma ("name") are word pairs that are opposite in meaning, such as hot and cold, obese and skinny, and up and down.
..... Click the link for more information.
In consumer theory, an inferior good is a good that increases in demand when the consumers income falls, unlike normal goods, for which the opposite is observed. Inferiority, in this sense, is an observable fact rather than a statement about the quality of the good.
..... Click the link for more information.
supply and demand describe market relations between prospective sellers and buyers of a good. The supply and demand model determines price and quantity sold in the market.
..... Click the link for more information.
For the rental car company, see .
Budget (from french
bougette) generally refers to a list of all planned expenses and revenues. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs
..... Click the link for more information. In economics, normal goods are any goods for which demand increases when income increases, i.e. with a positive income elasticity of demand. The term does not necessarily refer to the quality of the good.
..... Click the link for more information.
Microeconomics (or price theory) is a branch of economics that studies how individuals, households, and firms make decisions to allocate limited resources,[1] typically in markets where goods or services are being bought and sold.
..... Click the link for more information.
University of Michigan, Ann Arbor (U of M, UM or simply Michigan) is a coeducational public research university in the state of Michigan. The university was founded in 1817 in Detroit, about 20 years before the territory of Michigan officially became a state,
..... Click the link for more information.
California State University (CSU) is one of three public higher education systems in the state of California, the other two being the University of California system and the California Community College System.
..... Click the link for more information.
A good or commodity in economics is any object or service that increases utility, directly or indirectly, not to be confused with good in a moral or ethical sense (see Utilitarianism and consequentialist ethical theory).
..... Click the link for more information.
public good is a good that is non-rival and non-excludable. This means that consumption of the good by one individual does not reduce the amount of the good available for consumption by others; and no one can be effectively excluded from using that good.
..... Click the link for more information.
A
private good is defined in economics as a good that exhibits these properties:
- Excludable - it is reasonably possible to prevent a class of consumers (e.g. those who have not paid for it) from consuming the good.
..... Click the link for more information. For the philosophical term, see .
In economics the term
common good is used to refer to rivalrous and non-excludable goods. One of the most common ways of looking at goods in economics, illustrated in the table below, is the classic division based
..... Click the link for more information. A common-pool resource (CPR), alternatively termed a common property resource, is a particular type of good consisting of a natural or human-made resource system, the size or characteristics of which makes it costly, but not impossible, to exclude potential beneficiaries
..... Click the link for more information.
Club goods (also known as collective goods) are a type of good in economics, sometimes classified as a subtype of public goods that are excludable but non-rivalrous, at least until reaching a point where congestion occurs.
..... Click the link for more information.
Types of goods public good - private good - common good - common-pool resource - club good - anti-rival goods
rivalrous good and non-excludable good complement good vs. substitute good free good vs.
..... Click the link for more information. In economics, a good is considered either rivalrous (rival) or nonrival. Rival goods are goods whose consumption by one consumer prevents simultaneous consumption by other consumers. Most goods, both durable and nondurable, are rival goods. A hammer is a durable rival good.
..... Click the link for more information.
Excludability is defined in economics as whether or not it is possible to exclude people who have not paid for a good or service from consuming it. Where it is impossible to prevent an individual who does not pay for that thing from enjoying the benefits of it, the good is termed
..... Click the link for more information.
A complementary good or complement good in economics is a good which is consumed with another good; its cross elasticity of demand is negative. This means that, if goods A and B were complements, more of good A being bought would result in more of good B also being bought.
..... Click the link for more information.
In economics, one kind of good (or service) is said to be a substitute good for another kind insofar as the two kinds of goods can be consumed or used in place of one another in at least some of their possible uses.
..... Click the link for more information.
The free good is a term used in economics to describe a good that is not scarce. A free good is available in as great a quantity as desired with zero opportunity cost to society.
A good that is made available at zero price is not necessarily a free good.
..... Click the link for more information.
In economics, scarcity is defined as the condition of human wants and needs exceeding production possibilities. In other words, society does not have sufficient productive resources to fulfill those wants and needs.
..... Click the link for more information.