[amp_mcq option1=”Inferior goods” option2=”Superior goods” option3=”Giffen goods” option4=”Normal goods” correct=”option3″]<\/p>\n
The correct answer is C. Giffen goods.<\/p>\n
A Giffen good is a good for which the demand curve slopes upward, meaning that an increase in price leads to an increase in demand. This is because the good is so important to the consumer’s budget that they are willing to spend more money on it even when the price goes up.<\/p>\n
For example, imagine a poor family that spends a large proportion of their income on bread. If the price of bread goes up, the family will have less money to spend on other goods, but they may still need to buy the same amount of bread, or even more, because they need it to survive. In this case, the demand for bread will increase even though the price has gone up.<\/p>\n
Inferior goods are goods that people consume less of as their income increases. For example, if you are poor, you may eat a lot of rice and beans. But as your income increases, you may start to eat more expensive foods like steak and lobster. In this case, rice and beans are inferior goods because you consume less of them as your income increases.<\/p>\n
Superior goods are goods that people consume more of as their income increases. For example, if you are poor, you may not be able to afford a car. But as your income increases, you may be able to afford to buy a car. In this case, a car is a superior good because you consume more of it as your income increases.<\/p>\n
Normal goods are goods that people consume more of as their income increases, but not as much as superior goods. For example, if you are poor, you may not be able to afford to go out to eat very often. But as your income increases, you may be able to go out to eat more often. In this case, going out to eat is a normal good because you consume more of it as your income increases, but not as much as you would consume a superior good like a car.<\/p>\n","protected":false},"excerpt":{"rendered":"
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