Giffen Goods

A Giffen good is a type of good that exhibits the paradoxical behavior of increasing in demand when its price increases. This seemingly paradoxical behavior occurs because the good is so cheap that even a proportionally large increase in its price does not significantly impact its affordability for the majority of consumers. Instead, the increase in price induces a substitution effect, whereby consumers disproportionately consume the good, thereby driving up demand. Giffen goods are generally considered to be inferior goods that are typically of low quality and inexpensive.