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Question
What are Giffen goods?
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Solution
Giffen goods are poor man's goods which people consume more as their prices rise.
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RELATED QUESTIONS
Distinguish between:
Inferior goods and superior goods
Statements that explain Giffen’s paradox:
- It is an exception to the law of demand.
- It is applicable to inferior or low quality goods.
- Demand increases when the prices of inferior goods fall
- It was identified by Prof. Alfred Marshall.
State with reason whether you agree or disagree with the following statement:
When the prices of Giffen goods falls, demand for such goods rises.
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Questions:
- Diagram’ A ‘represents _____in demand (1m)
- Diagram ‘B’ represents _____in demand (1m)
- In diagram ‘A’ movement of demand curve is in_____ direction (1m)
- In diagram ‘B’ movement of demand curve is in______ direction (1m)
State with reasons whether you agree or disagree with the following statement:
There is a direct relationship between the price of Giffen goods and its demand.
State with reasons whether you agree or disagree with the following statements :
When price of Giffen goods fall, the demand for it increases.
When price of Giffen goods fall, the demand for it increases.
Which of the following best describes a Giffen good?
Why do people buy more luxury goods when prices go up, defying the usual law of demand?
Which situation is an example of speculation affecting demand?
