The Z Curve:
Supply and Demand for Giffen Goods
DOI:
https://doi.org/10.30800/mises.2018.v6.311Keywords:
Demand Curve, Supply Curve, Giffen Good, Consumer TheoryAbstract
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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BLOCK, Walter; PHILBOIS, Gabriel. Giffen Goods and Backward Bending Supply Curves of Labor. Estudios Libertarios, v.1, p.55-59, 2018. Available at: <http://www.notaslibertarias.com/wp-content/uploads/2018/09/Article-8.pdf>. Acessed in: October 10, 2018
BLOCK, Walter; WYSOCKI, Igor. A defense of Rothbard on the demand curve against Hudik’s critique. Summer. Acta Economica et Turistica, Forthcoming, 2018.
JENSEN, R.; MILLER, N. Miller. Giffen Goods. Cambridge: Mimeo John F. Kennedy School of Government, Harvard University, 2001.
KLEIN, Peter G. A note on Giffen goods. Unpublished, s/d. Available at: <http://web.missouri.edu/~kleinp/misc/giffen.pdf>. <http://sites.baylor.edu/peter_klein/files/2016/06/giffen-t82d17.pdf>. Acessed in: October 10, 2018
KLEIN, Peter G. SALERNO, Joseph T. Giffen’s Paradox and the Law of Demand. Unpublished, s/d. Available at: <https://mises.org/library/giffen%E2%80%99s-paradox-and-law-demand>. Acessed in:
LEINBENTEIN, Harvey. Bandwagon, Snob, and Veblen Effects in the Theory of Consumers’ Demand. The Quarterly Journal of Economics, May, p. 183-207, 1950. Available at: <https://www.jstor.org/stable/1882692?seq=22#page_scan_tab_contents>. Acessed in:
LEINBENTEIN, Harvey. Bandwagon, Snob, and Veblen Effects in the Theory of Consumers’ Demand. In: BREIT, William; HOCHMAN, Harold (eds.). Readings in Microeconomics, Holt, Rinehart and Winston, p. 123-150, 1968.
LIPSEY, Richard G.; ROSENBLUTH, Gideon. A Contribution to the New Theory of Demand: A Rehabilitation of the Giffen Good. The Canadian Journal of Economics, v.. 4, n. 2 May, p. 131-163, 1971.
MCKENZIE, D. Are tortillas a Giffen good in Mexico?. Economics Bulletin, 2002. Available at: <http://www.accessecon.com/pubs/EB/2002/Volume15/EB-01O10003A.pdf>. Acessed in:
MISES, Ludwig von. Human Action. Scholars’ Edition. Auburn: Mises Institute, [1949] 1998.
MURPHY, Robert P.; WUTSCHER, Robert; BLOCK, Walter. Mathematics in Economics: An Austrian Methodological Critique. Philosophical Investigations, January, v. 33, n. 1, p. 44-66, 2010. Available at: <http://www3.interscience.wiley.com/cgi-bin/fulltext/123209256/PDFSTART;
http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9205.2009.01397.x/full>. Acessed in:
ROTHBARD, Murray N. Man, Economy and State. Auburn: Ludwig von Mises Institute, 2004 [1962].
SPIEGEL, Uriel. The Case of a ‘Giffen Good. The Journal of Economic Education,
v. 25, n. 2, p. 137-147, 1994.
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Published
2018-11-23
How to Cite
1.
Block W, Philbois G. The Z Curve:: Supply and Demand for Giffen Goods. MisesJournal [Internet]. 2018 Nov. 23 [cited 2024 Nov. 21];6(3). Available from: https://misesjournal.org.br/misesjournal/article/view/311
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Original Research Articles
