What is Giffen’s Paradox?
According to the Law of Demand, when the price of a commodity
falls the demand for it rises. Giffen's Paradox is an exception to this law. It
is named after the 19th century British economist, Sir Robert Giffen, who found
that when the price of bread fell, the demand for it also fell. This was
because when the price fell, the real income of the consumer rose and she was
in a position to buy better quality/more bread.
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