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Answers
Answer:
This is an exceptional case to law of demand.
Explanation:
According to law of demand, if the price of a commodity falls,then tha demand of that commodity raises (which is inverse relation). Sir Robert Giffen, a Scottish economist and statistician, was surprised to and out that
as the price of bread increased, the British workers purchased more bread and not less of it. This was
something against the law of demand. Why did this happen? The reason given for this is that when the
price of bread went up, it caused such a large decline in the purchasing power of the poor people that
they were forced to cut down the consumption of meat and other more expensive foods. Since bread,
even when its price was higher than before, was still the cheapest food article, people consumed more
of it and not less when its price went up.
Such goods which exhibit direct price-demand relationship are called ‘Giffen goods’. Generally those
goods which are inferior, with no close substitutes easily available and which occupy a substantial place in
consumer’s budget are called ‘Giffen goods’. All Giffen goods are inferior goods; but all inferior goods are
not Giffen goods. Inferior goods ought to have a close substitute. Moreover, the concept of inferior goods
is related to the income of the consumer i.e. the quantity demanded of an inferior good falls as income
rises, price remaining constant as against the concept of giffen goods which is related to the price of the
product itself. Examples of Giffen goods are coarse grains like bajra, low quality rice and wheat etc.