Good x is an inferior good,but not a Giffen good.When the price of x increases,the consumer will consume
A)more x.
B)the same amount of x.
C)less x.
D)more or less x depending on the size of the income effect relative to the size of the substitution effect.

Question

Quizplus · Accepted Answer

Since good x is an inferior good, as its price increases, consumers tend to consume less of it. However, it is not a Giffen good because the income effect dominates the substitution effect, which means that the decrease in quantity demanded due to the price increase is less than the increase due to the income effect. Therefore, the consumer will consume less of good x.

Good X Is an Inferior Good,but Not a Giffen Good