Finding symmetries in an unsymmetrical world ..

Posts Tagged ‘Ideas

There is a phenomenon that has long puzzed the economits view of the supply and demand, and it is the Giffen Goods .

A Giffen good is termed as a good which people consume more of as price rises. If that be it, how is it  that this class of good defies the supply and demand equation ?

The existence of the phenomenon was first identified by a Victorian-era British statistician, Robert Giffen.

There are three necessary preconditions for this situation to arise:

a.The good in question must be an inferior good,

b.There must be a lack of close substitute goods, and

c. The good must constitute a substantial percentage of the buyer’s income, but not such a substantial percentage of the buyer’s income that none of the associated normal goods are consumed.

Water, Rice and other staple foods have long been said to be an example of the Giffen goods.

Here’s another view though :

If rice be a Giffen good , then increase in the price should increase its demand. But if for the same amount of money one can afford much luxurious Meat, why would he buy Rice ?

Is it just because Rice would still be more affordable? But even if that be it, why does the demand rice ?

Looking at it from this perspective :

I consume 4 kgs of Rice and 2 Kgs of meat in a week (Assuming these make up the substancial part of my income.

The price of rice now shoots ,and I can only afford to buy 2.5 Kgs.

But rice still being more affordable I cut down on my consumption of meat,and buy rice instead .

Here’s the trick !

If the price of a Giffen  good increases, then the supply for these “luxurious goods ” must decrease ,and they would become more affordable, as there will be more supply of it due to less consumption !

Wouldn’t they appear to be more affordable?

This is a question that is seldom ever raised in the context of the Giffen Goods.

So, the price of so called “Giffen Good” has a virtually cap, after which the demand for it, Must decrease and it will conform to the normal supply and demand curve .

So here’s my take ( Probably justifying why Giffen Goods is a less noted  phenomena) :

There should be none on the Giffen goods, the goods at best can adhere to the inelasticy of the demand curve, i.e the increase in price doesn’t change the consumption of the so perceived vital goods .

~

ek

I doubt, I think therefore I amRené Descartes


Seth writes that to do something all you need is some MOOD , far from ordinary claims of not having enough information, that’s out there for you, waiting for you, all you need is the perseverance and persistence to put it.

I know of a friend who always gives me enough ideas to juggle with , so many of them at times that at times I find myself warning him if he doesn’t do anything about it, I might as well steal them.


Ahh! Stealing someone else’s ideas. Of course the ideas that spread win, and who likes to conceive an idea, work on it, and then say’ oh I am not prepared yet, not enough’.




Buzo’s turn me off. I am 24, full of energy, and here with an open mind, to explore not what surrounds me, but what is within me. Call them what you should the NoNo’s ,buzo’s , they find remarkably innovative ways of turning down a prospective idea, and why things will never succeed, and why you are never prepared enough.

Well, the fact is that, you will never be prepared enough.

Watch Guy talking about Buzo’s here and why one should avoid them.



Obstacles are the things that you see when you take your eyes off the goal.

Don’t do that !

My two cents this year:

Do not listen to people who turn you off.

Follow your heart, fail better, smarter, faster.

~

ek

We cannot change the cards we are dealt, just how we play the hand.

 


Hey there, would be nice to have you around !

That’s me

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