Giffen Goods and Inferior Goods Quiz
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Questions and Answers

What is the relation between a Giffen good and an inferior good?

  • An inferior good must be a Giffen good
  • A Giffen good is inferior. When its price drops, the income effect is dominated by the substitution effect.
  • A Giffen good is inferior. When its price drops, the income effect dominates the substitution effect. (correct)
  • A Giffen good cannot be inferior.

    • If Adam spends 70% of his income on steak, how many loaves of bread does Adam consume?

  • 100
  • 500
  • 350
  • 150 (correct)

    • If P=20-Q, the marginal buyer when Q=10 is _______.

  • the buyer who is willing to pay $20
  • the buyer who is willing to pay $10 (correct)
  • none of the above
  • the buyer who is willing to pay $5

    • Which statement is TRUE?

    <p>The indifference curve bows outward because of the diminishing marginal rate of substitution</p> Signup and view all the answers

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