What is Giffen Paradox

Answer :

Named after economist Sir Robert Giffen, he said giffen goods are those inferior goods on which the consumer spends a large part of his income and the demand for which falls with a fall in their price for example-maize and jowar are considered to be inferior food grains for average consumers.

As the price of maize falls, real income(income effect) rises, know the consumer may afford to purchase superior foods like wheat or rice. Since there is a limit to intake of food, quantity demanded for maize would be lower.

Similarly, if the price of maize rises, poor consumers will be forced to spend more on the purchase of maize because it is essential for their survival. They cannot afford to purchase the same quantity of superior food items that they purchased earlier because they would be left with lesser money to spend on other commodities.

Thus, they will increase the demand for maize at the cost of wheat or rice.

Giffen’s Paradox refers to this situation of exception to the law of demand.

when demand curve slopes upward curve – 

To Know read Exception to the law of Demand/when demand curve slopes upward /a positive slope demand curve.