Neutral good
Encyclopedia
In economics
, neutral goods are goods
that have a demand
that is not dependent to the income
.
Examples of neutral goods include prescription medicines for people with medical conditions, such as insulin for diabetics. Although an individual's income may vary their consumption of vital prescription medicines will remain constant.
An alternative definition says that, a good is a neutral good if the consumer does not care about its consumption at all. That is, the consumption of that good will not increase the consumer's utility. For example, if a consumer likes texting, but not data package on his phone contract (i.e.data package is the neutral good here), then increasing the amount of data allowance will not increase his utility. If an indifference curve is constructed such that Data Allowance is measured on Y axis and Texting is on X axis, the indifference curve will be a vertical line.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, neutral goods are goods
Goods
Goods may refer to;*Good , physical product*Personal property, legal personal chattels...
that have a demand
Demand
- Economics :*Demand , the desire to own something and the ability to pay for it*Demand curve, a graphic representation of a demand schedule*Demand deposit, the money in checking accounts...
that is not dependent to the income
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
.
Examples of neutral goods include prescription medicines for people with medical conditions, such as insulin for diabetics. Although an individual's income may vary their consumption of vital prescription medicines will remain constant.
An alternative definition says that, a good is a neutral good if the consumer does not care about its consumption at all. That is, the consumption of that good will not increase the consumer's utility. For example, if a consumer likes texting, but not data package on his phone contract (i.e.data package is the neutral good here), then increasing the amount of data allowance will not increase his utility. If an indifference curve is constructed such that Data Allowance is measured on Y axis and Texting is on X axis, the indifference curve will be a vertical line.