The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $4.50.When the price of X increases from point S to point R along the demand curve,it is clear that good X ___________ (is,is not)a Giffen good because _______________.
A)is not; the substitution effect reinforces the income effect.
B)is not; good X is an inferior good.
C)is; the total effect of the price increase is negative.
D)is; the income effect reinforces the substitution effect.
E)is; the income effect is larger than the substitution effect.

Question

The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $4.50.When the price of X increases from point S to point R along the demand curve,it is clear that good X ___________ (is,is not)a Giffen good because _______________. 
A)is not; the substitution effect reinforces the income effect. 
B)is not; good X is an inferior good. 
C)is; the total effect of the price increase is negative. 
D)is; the income effect reinforces the substitution effect. 
E)is; the income effect is larger than the substitution effect.

Quizplus · Accepted Answer

The Answer of The figure below shows a consumer maximizing utility at two different prices (the left panel)and the consumer's demand for good X at the same two prices of good X (the right panel).The price of good Y is $4.50.When the price of X increases from point S to point R along the demand curve,it is clear that good X ___________ (is,is not)a Giffen good because _______________. 
A)is not; the substitution effect reinforces the income effect. 
B)is not; good X is an inferior good. 
C)is; the total effect of the price increase is negative. 
D)is; the income effect reinforces the substitution effect. 
E)is; the income effect is larger than the substitution effect.

The Figure Below Shows a Consumer Maximizing Utility at Two