Multiple choice

When goods exhibit direct price-demand relationship, they are called

  1. Complementary goods

  2. Giffen goods

  3. Competing goods

  4. Conspicuous goods

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Sir Robert Giffen, an economist, was surprised to find that as the price of bread increased, British workers purchased more bread rather than less. This was something against the law of demand. The reason given for this is when the price of bread went up, it caused such a large decline in purchasing power of the poor that they were forced to cut down the consumption of meat and other expensive eatables. Since bread, even at its highest price, 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.