Economics

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Topics which I came across & can remember as of now:

Veblen Goods: High status goods, when price increases, preference for them
increases & hence their demand increases. ( vice versa) eg. luxury items. Such
goods shows demonstration effect (bandwagon effect, for luxury items). Curve is
positive upward sloping unlike other goods.
Giffen Goods: An inferior good for which a rise in its price makes people buy even
more of the product as a consequence of substitution and the income effect.
Negative income effect.
The idea is that if you are very poor and the price of your basic foodstuff (e.g bread)
increases, then you cant afford the more expensive alternative food (meat)
therefore, you end up buying more bread because it is the only thing you can afford.
As Mr.Giffen has pointed out, a rise in the price of bread makes so large a drain on
the resources of the poorer labouring families and raises so much the marginal
utility of money to them, that they are forced to curtail their consumption of meat
and the more expensive farinaceous foods: and, bread being still the cheapest food
which they can get and will take, they consume more, and not less of it.
A Giffen good has the same affect higher price leads to higher demand. But, it is
for a completely different reason.
A giffen good occurs when a rise in price causes higher demand because the
income effect outweighs the substitution effect.
A Giffen goods income effect offsets the substitution effect, whereas the
contrary happens for an ordinary inferior good (which explains the
positive-sloped demand curve for Giffen goods)
Positive income effect will mean if B earn more money, he will buy more of good X.
(normal good)
Negative income effect will mean if B earns more money, he will buy less of good Y.
(inferior good)
Budget Line/ Price line- fixed income, can pick limited goods as per their utility
Isocost Line/Production line- fixed capital, pick combination of labour, capital for
max production
Read for Perfect competition, monopoly, monopolistic, oligopoly markets.
Rest I guess, we noted down in our Nehru place outing.

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