Economics · Theory of Demand
Giffen goods are highly inferior goods with no close substitutes. What happens to their quantity demanded when their price decreases?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Quantity demanded first increases and then falls to zero.
- 2Quantity demanded remains completely constant.
- 3Quantity demanded increases because of a strong positive substitution effect.
- 4Quantity demanded decreases because of a strong negative income effect.✓
Correct answer
Quantity demanded decreases because of a strong negative income effect.
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