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6-Types of Goods in Economics with examples | kinds of Goods | Goods Classification |various goods. - YouTube
Channel: Easy Learning Economics
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Hello friends, how are you?
Welcome to Easy Learning Economics.
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This is Dr. Kewal Ph.D. in Economics.
Today we are going to learn about the types
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of goods.
Goods are anything that satisfies human wants.
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The goods are classified in terms of a consumer
point of view, Producer point of view, and
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from the government point of view.
Goods that have been classified from the consumer
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point of view
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goods may be normal, inferior goods, superior
goods, related goods
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that may be classified into substitute goods,
complementary goods, Giffen goods, free goods,
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economic goods, necessity goods, comfort goods,
snob goods, or Voblen goods. These are the
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goods in terms of the consumer's point of
view.
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Normal Goods means goods that are related
in such a way that an increase in income increases
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the demand for that good are called normal
goods. For example, when income Y increases
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the demand for such goods increases like shoes.
Demand increases and when income decreases
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the demand decreases. The income elasticity
of demand (YED) for normal goods is equal
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to 1. When the income elasticity of demand
is equal to 1 such goods are normal goods
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or normal goods can be defined as that the
goods which are related in such a way that
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an increase in income increases the demand
for that good are called normal goods.
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Second is the inferior good when goods are
related in such a way that an increase in
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income decreases the demand for that good
for example increasing income decreasing the
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demand for public transport because people
would like to drive through their own cars.
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So it is inferior good.
Superior goods are those goods that are related
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in such a way that an increase in income the
demand for such goods increases and a major
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portion of the income is spent on the purchase
of the superior-good or luxury good. For example
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when the income increases the consumer would
like to purchase an A.C, the refrigerator
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these are the superior goods.
We can summarize it that normal goods are
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related in such a way that an increase in
income, increase the demand for those goods
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and inferior goods are related in such a way
that an increase in income decreases the demand
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for those goods like public transport and
superior goods are those goods for which income
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elasticity of demand YED is greater than 1.
In the case of normal goods, the income elasticity
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of demand is equal to 1. In the case of inferior
goods income elasticity of demand is less
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than 1. So these are the normal goods, inferior
goods, superior goods.
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While goods can also be classified as related
goods might be substitute or complement goods.
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When goods are related in such a way that
an increase in the price of one good the demand
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for other goods increases for example tea
and coffee both are substitute goods, for
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example, tea is Rs. 50 per cup and coffee
is Rs. 50 per cup. An increase in the price
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of a coffee from Rs. 50 to 60 rupees, the
demand for tea goes up. These types of goods
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are called substitute goods. Tea and coffee
are the substitute goods. Pepsi and coca-cola
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are the substitute goods. And complementary
goods are those goods that are related in
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such a way that an increase in the price of
one good decreases the demand for the other
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good. When the price of one good increases
the demand for other goods decreases for example
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when the price of a computer goes up the demand
for cartridges used in the computer decreases.
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Complement goods are used together. For example,
the demand for ink and the pen go together.
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The car and Petrol, the bike and petrol are
complementary goods.
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The Giffen goods are those goods that violate
the law of demand due to the income effect.
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For example, when the price of potatoes increases
the consumer would like to switch towards
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the chicken but he cannot afford the chicken,
so, he would purchase the potatoes at the
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increased price.
However the price of potatoes has been increased,
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rather to decrease the demand for potatoes
the consumer is going to increase the demand
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for potatoes due to the income effect because
the pocket does not permit him to purchase
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the chicken. So such goods violate the law
of demand these goods are called Giffen goods.
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Free goods are those goods having no opportunity
cost for example the sunlight, air, water
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having no opportunity cost.
The Economic goods are less in supply than
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their demand. For example, mobile phones,
cars are the economic goods that are less
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in supply than their demand.
Necessity goods are those goods that are demanded
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by the consumer for daily life like food,
shelter, and clothes these are the necessity
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goods.
Comfort goods are those goods that the consumers
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would like to purchase to increase their standard.
Like dinner at the restaurant is comfort good.
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The Voblen or snob goods are those goods as
the income increases the consumers demand
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more. These are the Voblen or snob goods.
So this is the classification of goods in
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terms of the consumer point of the view.
Now we are classifying the goods from the
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producer's point of view. From the producer's
point of view, the goods can be a compliment
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in the production, substitute in the production.
The complement goods are those goods that
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are supplied together. For example, meat and
leather are jointly supplied from a goat,
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and substitute goods in production are those
goods that are produced as an alternative
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by using the same factors of production. For
example color copy or black copy, color printer
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or black printer, refrigerator, or air condition.
Producers are selling refrigerators or air
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conditioners. So these are substitutes in
the production of goods.
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Now, the goods are classified from the government's
point of view. From the government perspective,
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the goods are classified into Public goods,
private goods, Merit goods, demerit goods,
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Quasai public goods,
Public goods are those goods that an increase
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in the consumption of one good does not decrease
the availability for others are called the
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public goods. For example, high way, Motorway,
Parks, and defense so these are public goods.
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Private goods are rivalry and excludable.
For example, the goods in the store market
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are private goods. Merit goods are those goods
that add to society and contribute to the
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welfare of an economy having positive externalities.
Externalities mean a cost or the benefit that
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is incurred on the third party for which they
are neither paid nor are penalized. Merit
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goods contribute to society like education
and health are the merit goods.
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Demerit goods having a negative impact on
the economy and having negative externalities
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in the economy like Alcohol, cigarette, wine,
are demerit goods. Quasai- Public Goods are
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non-rivalry but not excludable 100%. For example
websites, newspapers, are the Quasai-public
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goods.
It is all about the types of goods we can
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summarize all about the goods that anything
that satisfies human want is called good.
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Good may be tangible or intangible and goods
can be classified from the consumer point
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of view from the producer point of view, and
from the government point of view. From the
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consumer point of view, the goods might be
normal goods, superior goods, substitute goods,
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and complement goods, free goods, economic
goods, and Giffen goods. From the producer
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point of view complement in production, substitute
in production, and from the government point
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of view the public goods, private goods, Quasai-Public
goods, and other goods are merit goods, demerit
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goods,
So, it is all about the goods and their classification.
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I hope that the types of goods would be clear
to all of you. Thank you for watching.
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