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

Assumptions of monopolistic competition, Assumptions of Monopolistic Compet...

Assumptions of Monopolistic Competition Monopolistic competition as the name implies, combines features from both perfect competition and monopoly.  It has the following featu

Gm04, “Managerial economics involves use of economic analysis to make busin...

“Managerial economics involves use of economic analysis to make business decisions involving the best use of a firm’s scarce resources” Explain the statement with suitable example.

Individual and market demand schedule, Individual and market demand schedul...

Individual and market demand schedule The plan of the possible quantities that will be demanded at different prices by an individual is called Individual demand schedule. Su

two employees at a yearly rate, A profit-maximizing firm faces the followi...

A profit-maximizing firm faces the following options for hiring workers: a) Assume the firm has limited space so that it can only hire one worker. Which type of employee sh

What is a retention bonus, A Retention bonus is an incentive paid to a key ...

A Retention bonus is an incentive paid to a key employee to retain them by a critical business cycle. This could be a transitional period (like mergers and acquisitions) to ensure

Economies and diseconomies of scale, Economies and diseconomies of scale ar...

Economies and diseconomies of scale are of two types- external andinternal. Internal economies and diseconomies are those which a firm reaps as a result of its own expansion. Conve

Un''s integrated programme for commodities, The UN's Integrated Programme f...

The UN's Integrated Programme for Commodities Most of the political pressure for ICAs comes from spokesmen for the developing countries.  This is reflected in countless resolu

Determinants of demand, Determinants of Demand Price elasticity of dema...

Determinants of Demand Price elasticity of demand fluctuates from commodity to commodity. Whereas the demand of some commodities is highly elastic, demand for others is highly

Opportunity costs, When Burton Cummings graduated with honors from the Cana...

When Burton Cummings graduated with honors from the Canadian Trucking Academy, his father gave him a $350,000 tractor-trailer rig. Recently, Burton was boasting to some fellow truc

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