INTERNAL RESEARCH ASSIGNMENT

Name of the candidate: ASIF EKBAL Enrolment no. : 08715903912

Course: MBA 1ST Yr.

Batch: 2012

Subject: MANAGERIAL ECONOMICS

Subject code: MS105

Topic of assignment: UNIT 1

Subject Teacher’s name: MS MAMTA RANI

Research Assignment

Q.1) “Inferior goods are not those goods in case of which the law of demand fails, inferior goods are those goods in case of which income effect is negative or these are the goods the demand for which decreases when income increases
Yes, law of demand fails in case of GIFFIN GOODS. It is in the case of these goods that there is
(A) Inverse relationship between income and demand
(B) Positive relationship between price and demand.”
In the light of above statement explains the following statement with the help of an example:
“WHILE ALL GIFFIN GOODS ARE INFERIOR GOODS, ALL INFERIOR GOODS ARE NOT GIFFIN GOODS”

Solution:-

Demand may be defined as desire backed by adequate purchasing power. Benham therefore says – “the demand for anything at a given price, is the amount of it which will be bought per unit of time at that price.”
Law of Demand: - The Law of Demand states that when the price of a commodity rises, there occurs a fall in the amount purchased. Conversely, when the price of a commodity falls, the amount purchased increases. From the Law of Demand it follows that the Demand Curve, which shows how much of a commodity is purchased in the market curve at different price, is a curve sloping downwards from left to right. The demand curve may, under certain circumstance, rise upwards.

In the figure which is given below, DD1 is the demand curve of a commodity. The downward slope indicates that when price rises, less is demanded, and when price falls,