March 5, 2015

Shifting Demand of the World



There is a concept in economics of inferior and normal goods. Inferior goods, in layman, are goods that we would prefer given a decline in our income, e.g. instead of eating in a restaurant which you normally do, you choose a fast-food chain which offers lower cost of food. Normal good on one hand is the product or service that we would consume given our normal income. Thus, it could happen that a normal good to one person is an inferior good to other person and vise versa. The topic seems to be simple, yet, it has a complex side.

This concept could be a determinant of economic growth. When number of inferior goods decline, there is a possibility that income is increasing or credit openness is increasing as well; ease of availing credit cards. An increase in normal goods could mean that people preference is shifting to high quality products. Thus, countries that mass produced low quality product would probably observe a slowdown in their economy. And if that is the case, manufacturing and other sectors should determine the wind-blow of the market; whether it is heading to high demand for inferior or normal goods.

Maybe we should straightforwardly define a normal good. A normal good is a high quality good that could stand the test of time (this is my own definition of a normal good). Thus with this definition, a normal good is durable; it is a high quality good that takes into account the environment.

The shift from normal good could not only indicate an economic growth but an economic development as well. A low demand from low quality products could have a positive effect on the environment. High quality products normally undergo environment compliance while low quality products usually do not. Another good example of a shift from inferior to normal good is a fake Nike shoes and an original one. A consumer who prefers a normal good thinks of how the product was made rather than just the brand itself – this is an intelligent consumption. These are some of the scenarios – there are more applications of this concept.

Every time, humans are becoming intelligent and every man is realizing that his consumption has effect on him and the earth.


1 comment:

  1. Intelligent consumption is the keyword... Whatever we do has an effect on environment.

    ReplyDelete

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