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SHIPRA YADAV

· started a discussion

· 1 Months ago

what is giffen goods? (Question: 185986.0 )

giffen goods

Question:

The goods which are meant either for consumption or for investment, are called  –

Options:
A) Final goods
B) Giffen goods
C) Inferior goods
D) Intermediate goods
Solution:
Ans:(a) All goods which are meant either for consumption by consumers or  for investment by firms are called final goods. They are meant for final use and the final use of a product is only for consumption or investment. Thus they do not undergo and further transformation (or change) in the production process nor are sold. 

Knowledge Expert

· commented

· 1 Months ago

A Giffen good is typically an inferior product that does not have easily available substitutes, as a result of which the income effect dominates the substitution effect. Giffen goods are quite rare, to the extent that there is some debate about their actual existence.

A giffen good occurs when a rise in price causes higher demand because the income effect outweighs the substitution effect. Suppose you have a very low income and eat two basic food stuffs rice and meat. Meat is a luxury and is much more expensive than rice
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