A Giffen good is a good for which
A)a decrease in the price decreases the quantity demanded.
B)the substitution effect outweighs the income effect.
C)an increase in the price decreases the quantity demanded.
D)Both a) and b) are correct.

Question

Quizplus · Accepted Answer

A Giffen good is characterized by an increase in price leading to an increase in quantity demanded, which is contrary to the typical law of demand. This occurs because the income effect outweighs the substitution effect, not the other way around.

A Giffen Good Is a Good for Which