Finally we turn our attention to what economists term a Giffen good. If Giffen goods exist they would most likely be a subsistence food in a very poor economy. Imagine a situation where people are so poor that much of their income is spent on grain as a means of sustenance. They consume so much grain because it is far cheaper than any other food source.

    If grain is both very cheap and a large part of the diet a change in its price will generate a large income effect. If it is also an inferior good the income effect can overwhelm the substitution effect, leading to a very unusual behavior. Giffen goods such as this can actually have upward sloping demand curves, meaning that as price increases more is purchased and as price falls less is purchased.

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