Question
Explain the concept of Giffen Paradox
✓
Answer
Giffen Paradox:
- Giffen good are low quality or inferior goods like jowar, palm oil, etc.
- Demand for low quality goods and inferior goods decrease even if there prices falls.
- This behaviour of consumer was observed by Sit Robert Giffen in england.
- Sir Robert Giffen observed that when price of bread (inferior good)declined, people did not buy more of it, because with increased real income they preferred to buy superior goods like meat.
- In this case, demand curve slopes upward from left to right, showing exception to the law of demand.
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