Sunday, October 14, 2007

Toilet Paper


A normal good is one that the demand increases as income goes up. Say, for example, that you demand more designer jeans after you get a big fat raise. Then designer jeans is a normal good. But what about toilet paper? Does a person's demand for toilet paper increase as their income goes up?


I suppose demand could increase if food is a normal good. I'm off on a tangent here, but then toilet paper would be a "Gross Domestic Product." The econ 101 answer is that demand for toilet paper does goes up so it's a normal good, but the coefficient isn't greater than 1 so toilet paper is income inelastic. A salute goes to the College Board AP Macroeconomics discussion board and the QC Times article in today's paper by Chuck Jaffe.

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