Determine the giffen goods - law of demand, Managerial Economics

Assignment Help:

Determine the Giffen goods - law of demand

An exception to this law is the distinctive case of Giffen goods named after Sir Robert Giffen (1837-1910). 'Giffen goods' doesn't represent any particular commodity. It could be any low-grade commodity that is cheap as compared to its superior alternatives, consumed usually by the lower income group families as a significant consumer good. If price of such goods rises (price of its alternative remaining stable), its demand heightensin place of falling.

For instance the minimum consumption of food grains by alower income group family per month is 30 kgs comprising 20 kgs of bajra (a low-grade good) at the rate of 10$ per kg and 10 kgs of wheat (a high quality good) at 20$ per kg. They have a fixed expenditure of 400$ on these items. Though if the price of bajra rises to 12$ per kg the family would be compelled to decrease the consumption of wheat by 5 kgs and add to that of bajra by same quantity so as to meet its minimum consumption requisite within 400$ per month. Undoubtedly, the family's demand for bajra rises from 20 to 25 kgs when its price rises. 


Related Discussions:- Determine the giffen goods - law of demand

ROLE OF SCARCITY, ROLE OF SCARCITY IN MANAGEMENT DECISION MAKING

ROLE OF SCARCITY IN MANAGEMENT DECISION MAKING

Calculate maximize total revenue, A city has two newspapers. Demand for eit...

A city has two newspapers. Demand for either paper depends on its own price and the price of its rival. Demand functions for paper A & B respectively, measured in tens of thousands

Monopolistic practices, MONOPOLISTIC PRACTICES The following practices...

MONOPOLISTIC PRACTICES The following practices may be said to characterize monopolies. Exclusive dealing to supply and collective boycott Producers agree to supply onl

Development of skilled labour - external economies, Q. Development of Skill...

Q. Development of Skilled Labour - External Economies? As the industry grows training facilities for labour will increase. This helps development of skilled labour that would i

Elasticity.., elasticity concepts occupies a central place in policy formul...

elasticity concepts occupies a central place in policy formulation explain in details

Commercial banks, Commercial Banks A Commercial Bank is a financial in...

Commercial Banks A Commercial Bank is a financial institution which undertakes all kinds of ordinary banking business like accepting deposits, advancing loans and is a member

Quadratic cost function, Using the CD data estimate a quadratic cost functi...

Using the CD data estimate a quadratic cost function. Test the hypothesis that there is diminishing marginal cost. Be sure to state what critical value you are using. Then, using t

Structural unemployment, a)      In 1948, the money GNP was $520 billion an...

a)      In 1948, the money GNP was $520 billion and the price index was 120.  In order to   make the 1948 GNP comparable with the base year, the 1948 GNP must be adjusted    to:

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd