The difference between an inferior good and a Giffen good is that:
A) the substitution effect of a price increase raises consumption for a Giffen good but decreases consumption of an inferior good.
B) the income effect is larger than the substitution effect for a Giffen good but is smaller than the substitution effect for the inferior good.
C) the income effect is smaller than the substitution effect for a Giffen good but is larger than the substitution effect for the inferior good.
D) a Giffen good is a special case of a normal good and is therefore quite different from an inferior good.
Correct Answer:
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