A Giffen good is a type of inferior good where an increase in its price leads to an increase in quantity demanded, contrary to the law of demand.
Imagine you're at a fast food restaurant and the price of burgers increases. Normally, people would buy less burgers because they're more expensive. But with Giffen goods, like a cheap burger that's become a staple for low-income individuals, when the price goes up, people actually buy more because it's still their most affordable option.
Inferior Good: An inferior good is a type of product whose demand decreases as consumer income increases.
Law of Demand: The law of demand states that as the price of a product increases, the quantity demanded decreases, assuming all other factors remain constant.
Substitution Effect: The substitution effect refers to consumers switching from one product to another due to changes in relative prices.
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