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GIFFEN GOOD


The good for which the demand increases as its price increases, rather than falls (opposite to the general theory of demand)—named after Robert Giffen (1837–1910). It applies to the large proportion of the goods belonging to the household budget (as flour, rice, pulses, salt, onion, potato, etc. in India)—an increase in their prices produces a large negative income effect completely overcoming the normal substitution effect with, people buying more of the goods.