Two economists found empirical evidence that when the price of rice decreased in the Hunan province of China, local residents consumed less rice than before the price decrease. The study provides a real-world example of a(n)
A)normal good.
B)inferior good that is not a Giffen good.
C)Giffen good.
D)luxury good.

Question

Quizplus · Accepted Answer

A Giffen good is a product that people consume more of as the price rises and less of as the price falls, which is contrary to the basic law of demand. The study's findings that rice consumption decreased when its price decreased suggest that rice is behaving as a Giffen good in this context.

Two Economists Found Empirical Evidence That When the Price of Rice