Q.Write a short note on: Giffen paradox

The Giffen paradox is an exception to the law of demand in which the demand for a strongly inferior good (a Giffen good) rises when its price rises and falls when its price falls — contrary to the usual inverse price-quantity relationship. ## Meaning The Giffen paradox is named after Sir Robert Giffen, who observed it among very poor English workers in the case of a basic inferior food (such as cheap bread). He found that: - when the price of the inferior staple rose, poor consumers bought more of it, and - when its price fell, they bought less of it. This happens because the inferior good takes up a large part of a poor consumer's budget. When its price rises, the consumer becomes so much poorer in real terms that he cannot afford costlier substitutes (like meat or better food) and is forced to buy even more of the cheap staple. Such goods are called Giffen goods, and the paradox is a well-known exception to the law of demand. …