Sam consumes only two goods, and . If is a Giffen good for Sam, then
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2 marks, −1MicroeconomicsDemand theory and elasticityIncome and substitution effects: the Slutsky equationModerateabout 2 min
JNU SIS 2015 Question 34: Demand theory and elasticity
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Sam consumes only two goods, X and Y. If X is a Giffen good for Sam, then (A) Y must be a Giffen good for Sam (B) Y must be a normal good for Sam (C) Both (a) and (b) are false (D) Not enough information given
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What this question tests
This question is on Income and substitution effects: the Slutsky equation, part of Demand theory and elasticity in Microeconomics.
Splitting a price change into a substitution effect and an income effect, and why Giffen goods break the law of demand.
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Question from the JNU SIS 2015 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.