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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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PASSAGE
Mona visits a shopping mall near her residence. She shops for monthly groceries which include rice, wheat, sugar, cooking oil and pulses. She purchases additional quantities of sugar much more than her monthly requirement anticipating that prices may rise in the coming days due to festivities.
She observes two different qualities of tur dal out of which one quality is inferior and the other is superior. She does not purchase the low quality tur dal even though its price is comparatively lower. Instead she prefers to buy superior quality tur dal.
- Identify the exception to the law of demand in the given passage with reference to purchase of additional quantities of sugar much more than monthly requirement anticipating that prices may rise in the coming days due to festivities (1mark)
- Identify the kind of good with reference to low quality tur dal (1mark)
- Express your personal opinion based on the above information. (2 marks)
State with reason whether you agree or disagree with the following statement:
When price of Giffen goods fall, the demand for it increases.
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.
In which exception to the law of demand does the consumer equate price and quality.
State with reasons whether you agree or disagree with the following statement:
When price of Giffen goods fall, the demand for it increases.
Give one point each of similarity and dissimilarity between Giffen goods and Veblen goods.
Why are prestige good an exception to the law of demand?
Which exception to the law of demand is primarily based on consumer beliefs about product quality?
What happens to the demand for necessities like salt or electricity when their prices increase?
