Goods

In economics, goods are items that are usually (but not always) tangible, that satisfy human wants and provide utility. Goods consist of material objects, even complex ones, which are considered differently from non-material goods, that is, from services. The goods can be an economic, natural or technically produced good, capable of being exchanged for other goods (bartering case), or bought for money in a market. The origin of the term “assets” can be traced back to the Greek meiromai (= to participate, to have a part), and then to the Latin merere (in the sense of “to deserve”, “to earn”).

Public Goods

Economists have a strict definition of a public good, and it does not necessarily include all goods financed through taxes. Public goods have two distinct aspects: non-excludability and non-rivalrous consumption. Non-excludability means that the cost of keeping nonpayers from enjoying the benefits of the good or service is prohibitive (it is costly or impossible for one user to exclude others from using the good).

Non-rivalrous consumption is public goods that are consumed by people, but whose supply is not affected by people’s consumption. In other words, when an individual or a group of individuals use a particular good, the supply left for other people to use remains unchanged. Therefore, non-rivalrous goods can be consumed over and over again without the fear of depletion of supply.

Markets often have a difficult time producing public goods because free riders will attempt to use the public good without paying for it. One can overcome the free-rider problem through measures to assure that users of the public good pay for it. Such measures include government actions, social pressures, and specific situations where markets have discovered a way to collect payments.

Giffen goods

A Giffen good describes an extreme case for an inferior good. In theory, a Giffen good would display the characteristic that as price increases, demand for the product increases. In the real world application, there has not been a true example of a Giffen good, though a popular albeit historically inaccurate example is the purchase of potatoes (an inferior good) as prices continued to increase during the Irish potato famine.

Veblen goods

Some expensive commodities like diamonds, expensive cars, designer clothing, and other high-price limited items, are used as status symbols to display wealth. The more expensive these commodities become, the higher their value as a status symbol and the greater the demand for them. The amount demanded of these commodities increases with an increase in their price and decrease with a decrease in their price. These goods are known as Veblen goods.

Scroll to Top