Giffen Good

This refers to the theory that, for a certain type of consumer, demand for some goods or services might rise as the price rises (reversing the usual law of demand).

This would occur when the buyer’s income is a bigger driver than the availability of alternative goods, most typically for poverty buyers. In this case, demand for inferior quality staple items (for example poor quality bread or rice) would rise as the cost of these staple items rise because the buyer does not have the resources to purchase alternatives. A similar effect (although it fails the technical definition of a Giffen good) can be seen with very high end luxury goods where a high price is seen as part of the value of the purchase – for example fine wines or celebrity-endorsed goods.

Giffen Good Demand Curve Graph

Giffen good is a term normally found in business economics and financial management;

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