In the case of a Giffen good, the demand curve will be :a)horizontal.b...
A Giffen good is a good for which demand increases as the price increases, and falls when the price decreases. A Giffen good has an upward-sloping demand curve, which is contrary to the fundamental law of demand which states that quantity demanded for a product falls as the price increases, resulting in a downward slope for the demand curve. 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. The term is named after the economist Robert Giffen.
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In the case of a Giffen good, the demand curve will be :a)horizontal.b...
Explanation:
Giffen good is a type of inferior good for which there is a positive relationship between the price of the good and its quantity demanded. It means that the demand for the good increases as its price increases, and vice versa. This type of good is quite rare and is mostly observed in poor households where the budget constraint is so tight that they cannot afford to buy a substitute good when the price of a Giffen good increases.
The demand curve of a Giffen good is upward-sloping to the right. It means that the quantity demanded of the good increases as the price of the good increases. The reason behind this is that when the price of the Giffen good increases, the household's budget constraint becomes tighter, and they have to spend more money on the good. This leads to a situation where the household has less money to spend on other goods, and they may have to reduce their consumption of those goods. As a result, the demand for the Giffen good increases, and the demand curve slopes upward to the right.
In contrast, for a normal good, the demand curve slopes downward to the right as the price of the good increases. It means that the quantity demanded of the good decreases as the price of the good increases because the household can afford to buy fewer units of the good as its price increases.
Conclusion:
In summary, the demand curve of a Giffen good is upward-sloping to the right, which means that the quantity demanded of the good increases as the price of the good increases. This type of good is quite rare and is mostly observed in poor households where the budget constraint is tight.
In the case of a Giffen good, the demand curve will be :a)horizontal.b...
Giffen goods or low quality goods
when price increases and demand for giffen goods also increases
both price and giffen goods have +ive relation
so that's why demand curve is upward sloping to right
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