GENERAL KNOWLEDGE

Detailed explanation-1: -A Giffen good is a low-income, non-luxury product for which demand increases as the price increases and vice versa. A Giffen good has an upward-sloping demand curve which is contrary to the fundamental laws of demand which are based on a downward sloping demand curve.

Detailed explanation-2: -The demand curve for a Giffen good is upward sloping as the income effect of a price decrease, or increase is opposite and greater than the substitution effect. The substitution effect means that a price change shifts the demand for a good to its substitute.

Detailed explanation-3: -Slope of the demand curve for Giffen goods is upward sloping, indicating a positive relationship between price and quantity demanded of a commodity.

Detailed explanation-4: -Giffen goods are rare forms of inferior goods that have no ready substitute or alternative, such as bread, rice, and potatoes. The only difference between Giffen goods and traditional inferior goods is that demand for the former increases even when their prices rise, regardless of a consumer’s income.

Detailed explanation-5: -Veblen goods are luxury items that connote status in society, such as cars, yachts, fine wines, celebrity-endorsed perfumes, and designer jewelry. Giffen goods are essential goods, such as rice, potatoes and wheat. Demand stays high when prices increase because there is no ready substitute for them.