Question

The goods that exhibit direct price-demand relationship are called.

• A. Giffen goods
• B. Complementary goods
• C. Substitute goods
• D. None of the above

Answer 1

Answer: (A)

Giffen goods

When the price of bread decreases, the real income of the consumers would increase and they can afford to buy a more expensive item (here, meat), thus, the demand for bread decreases. Hence such good which exhibits direct price – demand relationship are called 'Giffen goods'.