Changes

A '''Giffen good''' is a product or commodity that has a decrease in demand when its price decreases.  This violates the general law of [[supply and demand]] and is very unusual or even non-existent.  An equivalent way of defining a Giffen good is to say the rise in its price causes an increase in its demand.  One possible example may be with art paintings.

A '''Giffen good''' is a product or commodity that has a increase in demand when its price increases.  This violates the general law of [[supply and demand]] and is very unusual or even non-existent.  An equivalent way of defining a Giffen good is to say the rise in its price causes an increase in its demand.  One possible example may be with art paintings.

For a Giffen good to exist, theoretically three extraordinary economic characteristics must exist at the same time:

For a Giffen good to exist, theoretically three extraordinary economic characteristics must exist at the same time:

* There must be no substitutes available for the good.

* There must be no substitutes available for the good.

The most commonly cited example of a Giffen good was the [[potato]] in [[Ireland]] in the 1800s, when families lived almost entirely on potatoes for their sustenance.  

The most commonly cited example of a Giffen good was the [[potato]] in [[Ireland]] in the 1800s, when families lived almost entirely on potatoes for their sustenance. If a family ate meat once a week, and the price of potatoes rose, the family might not be able to afford meat, and instead be forced to eat potatoes 7 days a week, causing an increase in the demand for potatoes.

Some economists today feel that a Giffen good never existed and cannot exist.  An economics paper by John H. Nachbar explained:<ref>http://econpapers.repec.org/paper/wpawuwpge/9602001.htm</ref>

Some economists today feel that a Giffen good never existed and cannot exist.  An economics paper by John H. Nachbar explained:<ref>http://econpapers.repec.org/paper/wpawuwpge/9602001.htm</ref>