kids encyclopedia robot

Giffen good facts for kids

Kids Encyclopedia Facts

In economics, a Giffen good is one that people consume more of when its price increases. This violates the Law of Demand. This paradox is named after Robert Giffen, who first described it. Giffen observed that households that only had a minimum wage to survive, bought more bread when the bread price increased. This can be explained as follows: These households have to split their income between the cheap (and inferior) good, e.g. "bread", and an expensive good, e.g. meat. When the price of this inferior good increases by a certain amount, they can no longer afford to buy the more expensive good. For this reason, they spend more of their income on bread in order to be able to survive.

[[[:en:Alfred_Marshall|Alfred Marshall]]] wrote in Principles of Economics:

kids search engine
Giffen good Facts for Kids. Kiddle Encyclopedia.