The difference between Giffen goods and Inferior goods can be drawn clearly on the following grounds:
1. Goods whose demand rises with the increase in their prices are called Giffen goods. Those goods whose demand decreases with the increase in the consumer’s income over a specified level are known as inferior goods.
2. Giffen goods
violate the law of demand, whereas inferior goods are a part of consumer goods and
services, a determinant of demand.
3. Giffen goods
have no close substitutes. On the other hand, inferior goods have alternatives
of better quality.
4. When there is a fall in price, the overall price effect in the case of Giffen goods will be negative. As against this for inferior goods, the price effect would be positive, when there is a fall in prices.
5. The demand
curve for Giffen goods is upward sloping, but downward sloping for inferior goods.
6. Giffen goods
/products are necessary to fulfill the need for food, and they have only a few substitutes.
Bread, wheat, and rice are examples of Giffen goods. Examples of inferior goods
may vary across different regions. Nevertheless, the most common examples
include: Cheap groceries (frozen food, canned food, instant noodles, etc.),
Fast food & Public transportation.
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