Veblen vs. Giffen goods
DJ sent a mail according to which my color is supposed to be purple.
Now, purple is the royal color. And it was considered rare due to economic considerations (very expensive to make). As price increased, it was considered more valuable, and so demand further increased (like also for diamonds presently). Basically, a veblen good. Goods that become desirable as their cost increases.
Similar to veblen goods are giffen goods. Giffen goods are goods for which also a price increase drives up the demand, but due to solely economic considerations, and no preference.
Now, purple is the royal color. And it was considered rare due to economic considerations (very expensive to make). As price increased, it was considered more valuable, and so demand further increased (like also for diamonds presently). Basically, a veblen good. Goods that become desirable as their cost increases.
Similar to veblen goods are giffen goods. Giffen goods are goods for which also a price increase drives up the demand, but due to solely economic considerations, and no preference.
3 Comments:
That reminds of ur debate with shalabh about the definition of 'finished goods' ...!!
@sahil
heh... indeed. I had personally nearly forgotten that!!
i wanna know my colour too !
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