If the income effect is negative and larger in absolute terms than the substitution effect, then the demand curve will be
A) vertical.
B) horizontal.
C) upward sloping.
D) downward sloping.
E) of indeterminate slope.

Question

Quizplus · Accepted Answer

When the negative income effect is larger than the substitution effect, the demand curve will be upward sloping, indicating a Giffen good where higher prices lead to higher quantity demanded.

If the Income Effect Is Negative and Larger in Absolute