Economics: Goods, Returns, & Applied Theory Economics Discussion Chapter

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Economics: Goods, Returns, & Applied Theory

Economics

There are a variety of good available on the market. Different goods serve different functions within a society's economy. In this brief paper, two types of goods will be discussed: normal goods and inferior goods. The paper will also make mention of the law of diminishing returns and will provide examples of each of the three topics. Finally, drawing directly from contemporary news, the paper will reflect upon an economic issue relating it to concepts recently acquired through the course content.

Contemporary News in Economics: Goods, Returns, & Applied Theory

As the market improves and more people generate greater quantities of income, there are certain products that people demand more because of the increase in their incomes. These are the items that are popular and that many people desire yet the price is just out of their economic means. Once these people generate more income, the products they desire are within their reach. They purchase them. When this occurs on a grander scale, we can say that the general demand for the product increases as the income decreases. These kinds of products are normal goods. When income decreases and price stays the same it is another sign that the products in question are normal goods. The word "normal" does not refer to the quality or quantity of the product in question.

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"Normal" refers to the nature of the relationship among consumer income, demand, and products. Normal goods are the opposite of inferior goods. Normal goods in the American economy may be televisions or media players such as DVD players and Blue-Ray players.

Inferior goods are good that have a different relationship to income and demand than normal goods. Inferior goods are goods where there is a decrease in demand as consumer income rises. Inferior goods are typically associated with people in lower classes with lower incomes. Normal goods are associated with the financially comfortable, stable, or wealthy. Inferior goods again, like normal goods, do not refer to the quality of the item, but rather the term refers to how affordable the product is. Therefore, inferior goods are incredibly affordable. Many economists rely on inferior goods to provide insight into the current or past state of the economy and/or market. Many products that are sold at discount chain or 99-cent stores are examples of inferior goods. Discounted items such as batteries, household items like cleaning products, or the numerous other generically branded products sold at lower prices than name brand products are inferior goods. There are many examples in grocery store chains and pharmacy chains where there are local general brands or in-store brand versions of almost every product in the store, but are at reduced….....

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