What is Giffen Merchandise? What kind of product is Giffen merchandise?

Giffen commodity is a commodity that increases when the commodity rises within a certain range and decreases when the demand decreases under the condition that other factors do not change.

Giffen commodities were defined by the 19th-century British economist Robert Giffen when he studied the sale of potatoes in Ireland when Western economics studied the basic principles of demand.

Giffen goods are a special kind of resistance items, as resistance items, the substitution effect of Giffen goods changes in the opposite direction with **. For example, if there is an oversupply of goods in a country, then it is generally a Giffen commodity, and the Giffen item must first be inferior and replaceable.

Giffen commodities are a commodity that should have decreased when the demand was rising, but instead increased. The so-called Giffen commodity is that when the commodity rises, the demand increases, and when it falls, the demand decreases, which is the basic principle of demand in Western economics, and the British economist Robert Giffen in the 19th century defined when he studied the sales of potatoes in Ireland.

The common Giffen goods in life are expensive jewelry, cultural relics, calligraphy and paintings. "Giffen Merchandise" is named after the Englishman Giffen. The Englishman Giffen found that in 1845 when there was a famine in Ireland, the potato was **sharply**, but its demand increased.

It turned out that the famine had caused a decline in the real income of the people of Ireland, and the decline in the real income of potatoes, a low-grade food necessary for life, forced people to increase the purchase of such goods.

We all know the law of demand, that is, under other conditions, the demand for commodities is inversely proportional to its **. But there are some opposite situations in life, the demand is proportional to the ** of goods, we call "Giffen goods". The peculiarities of Giffen items are:

Its revenue effect outweighs its substitution effect. This is the special reason why the demand curve for Giffen items is sloping upwards to the right. There are also examples of "Giffen goods" in our lives, such as expensive jewelry, cultural relics, calligraphy and paintings, the more expensive such goods, the greater the demand, because the ** of such goods has become a symbol of consumer identity and status.

Extended Information:1If we admit that the theoretical Giffen commodity is the result of the superposition of the income effect and the substitution effect, then we are admitting that the theoretical Giffen commodity can exist under the premise that "other conditions are constant". The underlying reason for its existence is caused by the characteristics of the consumer's utility function or indifference curve (preference characteristics).

In the case that the set of commodities is two commodities, the indifference curve is seriously oblique to a coordinate axis, that is, the absolute value of its slope reaches a certain level, and a theoretical Giffen commodity appears. And the phenomenon discovered by Giffen at that time was not a pure Giffen commodity phenomenon.

2.In reality, the phenomenon of pure Giffen commodities is of course very rare.

First, in years of extreme famine, given the income at that time, Giffen commodities will appear.

Second, for extremely high-end goods and special new products, there will be a Giffen phenomenon, such as a new product, most consumers do not understand, at this time, if the lower ** as an ordinary alternative to the commodity (such as a mechanical pencil instead of an ordinary pencil) the demand is limited, but if it appears as a high-end product in a higher ** style, there will be more demand, people buy it as a status symbol. Therefore, the same kind of commodity may be a Giffen commodity for some people, and an ordinary commodity for another. This shows that when analyzing economic problems, it is necessary to clearly and clearly examine the temporal and spatial scope of changes in variables.

According to the various points of view that have been shown so far, this means that a commodity which, in a given period of time, has become a necessity of life for a person, and for which there is no substitute, is likely to become a Giffen commodity.

For example, grain **** has led to a large demand for potatoes, and potatoes are Giffen commodities.

FYI.

After all, people buy up and don't buy down.

For another example, some jewelry, calligraphy and paintings that can symbolize people's status and status, the more expensive they are, the more people buy them to show their dignity.

Inferior commodities are: commodities whose demand and income change in the opposite direction under the premise that ** remains unchanged. Giffen merchandise.

Yes: Under the premise of certain conditions (note: not under the premise that other conditions remain unchanged), the demand for goods that change in the same direction as **.

The general information is that Giffen goods must be inferior goods, but inferior goods are not necessarily Giffen goods. The above view is wrong.

Extended information: 1. Giffen commodity refers to the fact that under the condition that other factors (of course, other independent variables) remain unchanged, if the ** rises, the demand will increase, and we call this commodity Giffen commodity. "Giffen goods" (Giffen goods) are named after the Englishman Giffen.

2. Giffen discovered Ireland in 1845.

In the event of a famine, the demand for potatoes increases, although it is sharp. The reason for this was that the famine had caused a sharp drop in the real incomes of the Irish people, who had to increase the consumption of these low-grade foodstuffs, which were essential for life. Giffen goods are low-grade goods, but low-grade products are not necessarily Giffen goods.

That's true!

3. According to the definition of inferior products, the emergence of inferior products is when income changes, and income changes will cause changes in the demand curve. When income increases, the demand curve shifts to the left; When income decreases, the demand curve shifts to the right. Inferior goods are only related to income and have nothing to do with **.

The characteristics of inferior goods are: DQ Di is less than the amount in demand, I income.

4. According to the definition of Giffen goods, Giffen goods will inevitably appear when the demand curve changes, if the demand curve remains unchanged, the demand and ** are in the opposite direction. Only when there are two or more demand curves, compared on different demand curves, will there be the possibility of demand and ** in the same direction. This way we can launch:

Necessary conditions for the appearance of Giffen goods.

It's the demand curve that changes, which naturally leads to the fact that income is also changing.

5. The characteristics of Giffen commodities are: DQ DP is greater than the demand, P**. For inferior goods, dq dp is infinity because p is constant.

dp=0。Obviously, Giffen goods have no intersection with inferior goods, and the relationship between the two is incompatible. Giffen goods must not be inferior goods, and inferior goods must not be Giffen goods.

Alternative low-value goods.

This is an economic problem, generally speaking, when ****, the demand will decrease, but the demand for certain goods will rise.

The case is to take an example of potatoes, when the food ** is on the account, the demand should follow, but the demand for potatoes has risen, mainly because potatoes are a secondary substitute, people always have to eat, when the price of food has risen, consumers can only buy low-cost food, potatoes are one.

This illustrates that Giffen commodities are a secondary alternative.