Good Types and Elasticity
About this model
This diagram models various economic concepts related to the behavior of consumers in response to changes in income and price, specifically focusing on different types of goods: normal, luxury, inferior, necessity, and substitutable goods. It explores how demand and purchasing decisions shift when there are changes in players' earnings or the prices of items within a game economy. The structure incorporates pools to represent players' earnings and demand for items, sources to simulate the generation of money and changes in item prices, and registers to calculate percentages of income and demand increases, as well as income and price elasticity of demand.
Through state and resource connections, the diagram dynamically adjusts to simulate changes in demand and income, reflecting how these factors influence consumer behavior according to economic theory. For example, it demonstrates that an increase in players' income may lead to a greater demand for luxury goods (high elasticity) while demand for inferior goods decreases, aligning with the concept that players buy less of these as they have more money. Furthermore, the model takes into account price elasticity, showing what happens to demand when the price of goods changes - for instance, necessity goods exhibit inelastic demand, where demand drops insignificantly or not at all with a price increase, compared to more price-sensitive luxury goods. This diagram thus serves as a complex representation of consumer behavior within an economy, illustrating fundamental economic principles through the interactive and responsive nature of the Machinations platform.
"Good Types and Elasticity" is a public Machinations diagram shared in the Community by Harry Ashton, with 121 components.
It was created in June 2023 and last edited in June 2023.
Open the diagram in the Machinations app and press Play to watch the resources move, adjust its values to test how the system responds, or remix it to make an editable copy in My diagrams.
