Open AccessThe Z Curve:
Author(s) -
Walter E. Block,
Gabriel Philbois
Publication year - 2018
Publication title -
mises/mises: revista interdisciplinar de filosofia, direito e economia
Language(s) - English
Resource type - Journals
eISSN - 2594-9187
pISSN - 2318-0811
DOI - 10.30800/mises.2018.v6.311
Subject(s) - infinity , economics , demand curve , mathematical economics , simple (philosophy) , phenomenon , representation (politics) , econometrics , microeconomics , mathematics , physics , law , mathematical analysis , philosophy , epistemology , quantum mechanics , politics , political science
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.