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What will be the effect of change in income on giffin goods and normal goods ?
Asked by Suneha Sharma Last Modified
Answer 
Surya Mohan Gaur
Economics Tutor
Tanya Goyal
A change in income will have a positive effect on the standard goods, i.e. it has a direct relationship, whereas the change in income has a negative impact on the Giffen goods or has an inverse relationship. Eg. Revenue increasing in demand for standard goods will increase but decline for Giffen goods and vice versa.
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A normal good is one whose consumption increases when income increases. The demand curve for a normal product shifts out when a consumer's income increases.
Giffin Good is one whose consumption decreases when income increases and rises when income falls.
People purchase less often when their income rises. For example, people buy more steak than hamburger when they feel wealthier.
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Dear Student,
In standard goods, there is a dual play of 2 effects - income & substitution. Hence, more will be the demand when there is a downward change in prices. Also, there will be a rightward shift in everyday goods like rice, wheat soya, oil sugar, etc., B).
In GIFFEN Good, the income effect will be higher & -ve (negative) & overweigh the Postive substitution effect. The consumer will consume less quantity than earlier, leading demand depression. The negative income effect will be higher than that of inferior goods.
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