The Z Curve:

Supply and Demand for Giffen Goods

Keywords: Demand Curve, Supply Curve, Giffen Good, Consumer Theory

Abstract

The demand for a Giffen good is atypical, i.e. it increases as prices rise. The traditional representation for this phenomenon is a simple upward sloping demand curve. This model is very problematic, because it implies that demand can oscillate between infinity and negative infinity, an unrealistic scenario to say the least. In this paper we briefly discuss the problems with the traditional model and propose a better one: the Z curve. Because Giffen goods are a consequence of a reduction in the consumer’s income, the Z curve illustrates the effects of this change on wealth. Our goal here is not to dismiss the mental construction of Giffen Goods entirely . Rather, we bring forth what we believe to be a more precise method to graphically represent Giffen Goods.

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References

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Published
2018-11-23
How to Cite
Block, W., & Philbois, G. (2018). The Z Curve:. MISES: Interdisciplinary Journal of Philosophy, Law and Economics, 6(3). https://doi.org/10.30800/mises.2018.v6.311
Section
Original Research Articles