What is Giffen paradox ?
Asked by raksha2sanubth | 21st Jul, 2020, 06:42: PM
The Giffen Paradox is named after Sir Robert Giffen and is an exception to the Law of demand. He observed that when the price of bread increased, then the low-paid British wage earners bought more of bread and not less. Since the wage earners diet was mainly bread, with the increase in price they were forced to cut down their consumption of meat and other expensive food items. Thus to maintain their food intake, they bought bread even at higher prices. This phenomena was referred to as ‘Giffens Paradox’.
Demand for Giffen goods varies directly with price and thus is an exception to the law of Demand.
Answered by Christina | 23rd Jul, 2020, 12:35: PM
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