Good of first necessity

A good of first necessity is a product or service that is considered essential. In  economics , essential goods are considered normal goods , as are luxury goods , because they have the same type of behavior. The term good of first necessity is used in economics to study the different types of goods.

Luxury goods and basic necessities are in the same category because  the demand for such goods increases when people’s income increases. That is, we buy more of that good if the money we have increases. They are normal goods that comply with the Normal Law of Demand ,  which argues that as the  income of a person increases, the consumption of goods increases.  

However, this increase does not occur in the same way and that is the only difference between essential goods and luxury goods. When people’s income increases, the demand for essential goods increases more slowly and in less quantity than what the rent did, compared to luxury goods . Although our income increases, we will not increase the demand for essential goods much because that need will already be covered by our previous income and by increasing our income, we will dedicate that increase to another type of good.

Example of a commodity of first necessity

If we have a certain income we will buy a carton of milk. When our income increases, we may buy a maximum of two cartons of milk but we will not buy more because it is an already covered need. However, we will be more willing to buy a television, take a trip or buy a more expensive car.

Luxury goods, therefore, are special goods. Although we must also take into account that this classification will incorporate different goods according to the country in which we are. There will be places where television can be considered a normal good and in others a luxury good.

 

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