Tyler consumes two goods, wheat and steak. When the price of steak rises, he consumes less steak. When the price of wheat rises, he consumes more wheat. For Tyler,
A)steak is not a Giffen good but wheat is.
B)wheat is not a Giffen good but steak is.
C)both steak and wheat are normal goods.
D)both steak and wheat are Giffen goods.

Question

Quizplus · Accepted Answer

A Giffen good is a product that people consume more of as the price rises, which violates the basic law of demand. In this scenario, wheat is a Giffen good because Tyler consumes more of it as its price increases. Steak, however, is not a Giffen good because Tyler consumes less of it as its price rises, which aligns with the typical behavior described by the law of demand.

Tyler Consumes Two Goods, Wheat and Steak