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)
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.Â
-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.Â
-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.