A Giffen good

Question

A Giffen good

Quizplus · Accepted Answer

A Giffen good is a special subset of inferior goods in which the income effect dominates the substitution effect. This means that as the price of the good increases, consumers have less purchasing power, which causes them to buy even more of the inferior good due to the lack of affordable substitutes. A Giffen good results in an upward sloping demand curve, which is contrary to the typical downward sloping demand curve for most goods. Therefore, options A, B, and D are incorrect.

A Giffen Good