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For Giffen goods. A. Demand increses as price increases B. Have high income elasticity of demand C. That are short in supply D. None of the above Can anyone tell the correct option?
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For Giffen goods. A. Demand increses as price increases B. Have high i...
Giffen goods
Giffen goods are a special type of inferior goods for which the demand increases when the price of the good increases. These goods are named after Sir Robert Giffen, who observed this phenomenon in the 19th century while studying the economic conditions of Ireland.
Answer
The correct option is A. Demand increases as price increases.
Explanation
Giffen goods are a rare type of good that violates the law of demand, which states that demand for a good decreases as its price increases. In the case of Giffen goods, the opposite occurs, and demand increases as the price of the good increases. This is because Giffen goods are often considered essential goods for low-income individuals who spend a significant portion of their income on these goods.
When the price of a Giffen good increases, the low-income individuals who consume these goods cannot afford to buy as much of other goods. Therefore, they must spend a larger portion of their income on the Giffen good, leading to an increase in demand. Consequently, as the price of the Giffen good increases, the quantity demanded of that good also increases.
Conclusion
In conclusion, Giffen goods are a rare type of good that violates the law of demand. The demand for these goods increases as the price of the good increases, primarily because they are often considered essential goods for low-income individuals who spend a significant portion of their income on these goods. Therefore, the correct option for the question is A. Demand increases as price increases.
Giffen goods are a special type of inferior goods for which the demand increases when the price of the good increases. These goods are named after Sir Robert Giffen, who observed this phenomenon in the 19th century while studying the economic conditions of Ireland.
Answer
The correct option is A. Demand increases as price increases.
Explanation
Giffen goods are a rare type of good that violates the law of demand, which states that demand for a good decreases as its price increases. In the case of Giffen goods, the opposite occurs, and demand increases as the price of the good increases. This is because Giffen goods are often considered essential goods for low-income individuals who spend a significant portion of their income on these goods.
When the price of a Giffen good increases, the low-income individuals who consume these goods cannot afford to buy as much of other goods. Therefore, they must spend a larger portion of their income on the Giffen good, leading to an increase in demand. Consequently, as the price of the Giffen good increases, the quantity demanded of that good also increases.
Conclusion
In conclusion, Giffen goods are a rare type of good that violates the law of demand. The demand for these goods increases as the price of the good increases, primarily because they are often considered essential goods for low-income individuals who spend a significant portion of their income on these goods. Therefore, the correct option for the question is A. Demand increases as price increases.
Community Answer
For Giffen goods. A. Demand increses as price increases B. Have high i...
None of the above
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For Giffen goods. A. Demand increses as price increases B. Have high income elasticity of demand C. That are short in supply D. None of the above Can anyone tell the correct option?
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For Giffen goods. A. Demand increses as price increases B. Have high income elasticity of demand C. That are short in supply D. None of the above Can anyone tell the correct option? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about For Giffen goods. A. Demand increses as price increases B. Have high income elasticity of demand C. That are short in supply D. None of the above Can anyone tell the correct option? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for For Giffen goods. A. Demand increses as price increases B. Have high income elasticity of demand C. That are short in supply D. None of the above Can anyone tell the correct option?.
For Giffen goods. A. Demand increses as price increases B. Have high income elasticity of demand C. That are short in supply D. None of the above Can anyone tell the correct option? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about For Giffen goods. A. Demand increses as price increases B. Have high income elasticity of demand C. That are short in supply D. None of the above Can anyone tell the correct option? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for For Giffen goods. A. Demand increses as price increases B. Have high income elasticity of demand C. That are short in supply D. None of the above Can anyone tell the correct option?.
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