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If precondition #1 is changed to "The goods in question must be so inferior that the income effect is greater than the substitution effect" then this list defines necessary and sufficient conditions. The last condition is a condition on the buyer rather than the goods itself, and thus the phenomenon is also called a "Giffen behavior".
The existence of the focal point is first demonstrated by Schelling with a series of questions. Here is one example: to determine the time and place to meet a stranger in New York City, but without being able to communicate in person beforehand. In this coordination game, any place and time in the city could be an equilibrium solution.
For example, in public finance the Robinson Crusoe economy is used to study the various types of public goods and certain aspects of collective benefits. [2] It is used in growth economics to develop growth models for underdeveloped or developing countries to embark upon a steady growth path using techniques of savings and investment.
Vertical product differentiation can be measured objectively by a consumer. For example, when comparing two similar products, the quality and price can clearly be identified and ranked by the customer. If both A and B products have the same price to the consumer, then the market share for each one will be positive, according to the Hotelling ...
Economics focuses on the study of economic goods, i.e. goods that are scarce; in other words, producing the good requires expending effort or resources. Economic goods contrast with free goods such as air, for which there is an unlimited supply.
For example, beyond some point, further doses of antibiotics would kill no pathogens at all and might even become harmful to the body. Diminishing marginal utility is traditionally a microeconomic concept and often holds for an individual, although the marginal utility of a good or service might be increasing as well.
[1] [2] A monopoly occurs when a firm lacks any viable competition and is the sole producer of the industry's product. [1] [2] Because a monopoly faces no competition, it has absolute market power and can set a price above the firm's marginal cost. [1] [2] The monopoly ensures a monopoly price exists when it establishes the quantity of the ...
Related examples include distribution of different types of products, product bundling, product lining, and family branding. Economies of scope exist whenever the total cost of producing two different products or services (X and Y) is lower when a single firm instead of two separate firms produces by themselves.