Explanation:

Correct Option: (b) Explanation:  Statement 1 is incorrect: A Giffen good is a rare type of good, where an increase in price causes an increase in demand. Supplementary notes: Types of Goods in Indian Economy  Giffen Good: A Giffen good is a low income, non-luxury product that de fi es standard economic and consumer demand theory. A rare type of good, where an increase in price causes an increase in demand. The reason is that the income effect of a rise in the price causes you to buy more of this cheap good because you can’t afford more expensive goods.  Inferior Good: It is one whose demand drops when people’s incomes rise. The demands for inferior goods move in the opposite direction of the income of the consumer. Examples of inferior goods include low quality food items like coarse cereals. As the income of the consumer increases, the demand for an inferior good fall, and as the income decreases, the demand for an inferior good rise. This is because when the income of the consumer increases, he will substitute these goods with superior goods like wheat and rice. However, if the income of the consumer declines, he will spend substantial part of his income on this good.  Veblen Good: It is a good for which demand increases as the price increases. Veblen goods are typically high-quality goods that are made well, are exclusive, and are a status symbol. Examples of Veblen goods include designer jewellery, yachts, and luxury cars.