Q.2  Define Giffen Goods

Ans: Giffen goods are special type of inferior goods in which negative income effect is

stronger than negative substitution effect. Giffen goods do not follow law of

demand as their demand rises when their price rises. Examples of Giffen goods are

jowar and bajra etc.

Keywords: inferior goods, negative income effect, negative substitution effect,law of demand

Source :NIOS: PDF Link : Page Number : 53

Extra Info :  Veblen goods are luxury items that connote status in society, such as cars, yachts, fine wines, celebrity-endorsed perfumes, and designer jewelry.   The main difference between Veblen and Giffen goods is that the former are luxury items, such as cars, yachts, and designer jewelry, while the latter are non-luxury essentials such as potatoes, rice, and wheat. In both cases, demand will stay high when prices rise. For Veblen goods, that is about exclusivity. For Giffen goods, it is because they are essentials, with no ready substitute.