Introducing Supply and Demand
Read the sections on Demand, Supply, Market Equilibrium, and Government Intervention and Disequilibrium for a mathematical exposition of the demand and supply model, clicking through to the next when you have finished each page. The chapter also covers price ceilings and price floor analysis as well as quantity regulations.
1. Demand - The Law of Demand
Giffen Goods
A Giffen good describes an extreme case for an inferior good. In
theory, a Giffen good would display the characteristic that as price
increases, demand for the product increases. In the real world
application, there has not been a true example
of a Giffen good, though a popular albeit historically inaccurate
example is the purchase of potatoes (an inferior good) as prices
continued to increase during the Irish potato famine.