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  • ICAR and TNAU E-Course Summarized

    Summarized Notes
  • A giffen good is a type of good in which people consume more of the good as the price rises ( upward sloping demand curve) . Such a good violates which one of the following laws

    Question: A giffen good is a type of good in which people consume more of the good as the price rises ( upward sloping demand curve) . Such a good violates which one of the following laws

    Options:

    Law of indifference curve
    Law of diminishing marginal utility
    Law of demand*
    Law of rational consumer(more is preferred to less)

    ✅Explanation:
    A Giffen good is a rare exception to the law of demand. The law of demand states that as the price of a good increases, the quantity demanded decreases (downward sloping demand curve). However, for a Giffen good, the opposite happens; people consume more as the price rises. This behavior violates the traditional law of demand.

    📌 Other Options Explained:
    -a) Law of indifference curve: An indifference curve is a graphical representation of a combined products that gives similar kind of satisfaction to a consumer thereby making them indifferent. 
    -b) Law of diminishing marginal utility: The Law of Diminishing Marginal Utility states that the additional utility gained from an increase in consumption decreases with each subsequent increase in the level of consumption. 
    -d) Law of rational consumer (more is preferred to less): The Law of Rational Consumer, or the principle of preference, states that consumers prefer a greater quantity of goods and services to a lesser quantity, assuming that all other factors remain constant. This reflects the basic assumption of consumer behavior that more consumption leads to greater utility.

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