Answer to Question #98367 in Microeconomics for sadia

Question

what are giffen goods and what happen to giffen goods if income rises

Answer 1

Giffen goods are goods which are demanded more even when their prices rise. A giffen good is an inferior good with the unique characteristics that an increase in price actually increases the quantity of the good that is demanded. If income rises the demand for giffen goods decreases because people will consume less of inferior goods and more of normal goods.