Question

differentiate between giffen goods and inferior goods

Answer 1

hi Swati ..

➡What is a good ?

Good is a physical thing which we use to satisfy our needs.

✡There are two Kinds of Good according to Economics.

1. Normal goods

Normal goods refers to those good which demand reduces with the increase in its price and demand increases with the reduce in price.

2. Inferior Good.

These goods are low quality goods.
Inferior Good refers to those goods which demand reduces with the decrease in its price and demand increases with the increase in its price.
➡There is s positive relation between Demand and it's price.

✔ GIFFIN GOODS

It is a type of inferior goods. A Giffin good is a special kind of inferior good.
It is the lowest quality good.
Demand of giffin good reduces with the decrease in its price and vice versa.

A person has 100 rupees in his pocket and he wants to purchase a packet of Lays chips but there are many other chips available in the market with low quality than lays chips like Yellow diamond and kurkure.

In this case

Lays chips is a normal good for him and kurkure is an inferior good and Yellow diamond chips is a giffen good.

hope it helps
jerri