Giffen goods are a hot commodity – literally.
Giffen goods, named for the economist Sir Robert Giffen, are goods that do not respond to normal economic forces. In a normal marketplace, the price and quantity of goods situate according to the well-established supply and demand curves. And according to these economic principles, as the price of a good rises, the demand for the good at that price, falls. Think about your standard flat-screen television. At $1,200, the market for the product is understandably tepid. And for that price, you might even settle for the old tube screen. But at $400, suddenly your living room and kitchen are now boasting brand new televisions.
Giffen goods defy that logic. As the price Continue reading