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Neeraj

· started a discussion

· 1 Months ago

wrong (Question: 191358.0 )

wrong answer

Question:
Giffen goods are – 
Options:
A)

A product that people consume more often as the price rises

B) A product that people consume more often as the price falls
C) A product that people consume more or less in the same quantity irrespective of price changes 
D) None of the above 
Solution:
Ans: (a) 

A Giffen good is a product that people consume more of as the price rises and vice versa—violating the basic law of demand in microeconomics.

Knowledge Expert

· commented

· 1 Months ago

Dear Student,
Given answer is correct. A Giffen good is an inferior good which people consume more of as price rises, violating the law of demand.. In the Giffen good situation, cheaper close substitutes are not available. Because of the lack of substitutes, the income effect dominates, leading people to buy more of the good, even as its price rises.
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