Identify the goods whose demand falls due to the fall in their price.

Correct option is D

The correct answer is (D) Giffen goods

Explanation:

• Giffen goods are a special type of inferior goods for which demand increases when the price increases and demand decreases when the price falls. This counter-intuitive relationship occurs due to the income effect overpowering the substitution effect.
• When the price of a Giffen good falls, the real income of consumers increases, leading them to buy less of the good (since it's usually a staple good, and they may switch to better alternatives).
• Examples of Giffen goods are typically seen in situations of poverty where basic goods like bread or rice might follow this behavior.

Other options:

• Substitute goods: If the price of one substitute good falls, the demand for the other (related) substitute goods tends to fall, as consumers switch to the cheaper option.
• Normal goods: For normal goods, a fall in price usually leads to an increase in demand, as consumers are willing to buy more of the good at the lower price.
•  Inferior goods: For inferior goods, a fall in price typically leads to an increase in demand, as people with lower incomes tend to buy more of these goods.

Therefore, Giffen goods are the exception where demand falls as the price falls.