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Giffin Goods, introduced by Sir Robert Giffin, defy the Law of Demand by having an increased price lead to an increased quantity demanded, as observed by Bhoomi in a village setting. The concept extends to items like potatoes in Italy and rice in South Indian states, emphasizing the importance of understanding exceptions in economic theories for further learning.

Insights

  • Giffin Goods, introduced by Sir Robert Giffin, defy the Law of Demand by increasing in demand when their price rises, showcasing their unique nature as inferior goods.
  • The concept of snob appeal goods, exemplified by Mukesh Ambani's interest in luxury items, highlights how demand for such goods remains high despite price increases, emphasizing the psychological aspects influencing consumer behavior.

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Recent questions

  • What are Giffin Goods?

    Goods that defy Law of Demand by increasing demand.

  • How do Giffin Goods impact demand?

    They maintain high demand despite price increases.

  • What is the Law of Demand?

    Price increase leads to quantity demanded decrease.

  • How do Giffin Goods challenge economic theories?

    By defying traditional demand-price relationship.

  • How do Giffin Goods reflect consumer behavior?

    By showcasing demand increase with price rise.

Related videos

Summary

00:00

Giffin Goods: Defying Law of Demand

  • Sir Robert Giffin, an economist, introduced the concept of Giffin Goods, which are exceptions to the Law of Demand.
  • The Law of Demand states that when the price of a good increases, the quantity demanded should decrease, and vice versa.
  • Giffin Goods defy this law by having an increased price leading to an increased quantity demanded.
  • Bhoomi, an economist, observed this exception in a village where the price of bread rose from Rs 10 to Rs 12.
  • Despite the price hike, people bought more bread, showcasing the Giffin Goods phenomenon.
  • Neha's household exemplified this behavior, where they needed a minimum of 10 bread packets, even with the increased price.
  • Bhoomi challenged Neha to apply the Law of Demand, suggesting that they should buy less bread due to the price increase.
  • Through various scenarios, they realized that due to the inferior nature of bread, its demand remained high even with a price increase.
  • The concept of Giffin Goods extends to items like potatoes in Italy, where their cheapness makes them a staple despite price fluctuations.
  • Sir Robert Giffin coined the term Giffin Goods for such items that maintain high demand despite price increases due to their inferior nature.

20:28

Understanding Gifted Goods and Snob Appeal

  • Gifted goods concept is explained, emphasizing the importance of taking notes immediately to remember key details.
  • Example of salt and rice as gifted goods is provided, highlighting the significance of rice in South Indian states due to its high usage and affordability.
  • Mukesh Ambani's behavior regarding emeralds and diamonds is detailed, showcasing the concept of snob appeal and luxury goods.
  • Nita Ambani's reaction to Mukesh's plans for investing in emeralds and diamonds reflects the snob appeal phenomenon.
  • The economic concept of snob appeal goods is explained, indicating that the demand for luxury items remains high even with price increases.
  • The scenario of sanitizer and masks during Covid is used to illustrate how speculative behavior can impact demand for goods.
  • The exception of future price changes and its effect on demand is discussed, emphasizing the practical application of economic theories.
  • Consumer psychological bias and illusion are exemplified through a story about discounted products and consumer behavior.
  • The concept of goods being "too good to be true" and its impact on demand is explained through relatable examples.
  • The importance of understanding exceptions in economic theories is highlighted, preparing students for further learning and discussions in upcoming classes.

39:53

"Extend Class Duration for Enjoyable Activities"

  • Enjoy the activity and find it enjoyable
  • Consider extending the class duration in the future
  • Express gratitude for participation and sign off
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