For a giffen good when price falls?
Wednesday, March 02, 2022
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Question: For a giffen good when price falls?
Giffen goods are highly inferior for which the negative income effect outweighs the positive substitution effects. Therefore even though price falls then the quantity demanded still decreases. When the price of an inferior good falls two things happen that are consumers will substitute more of the inferior good for other goods because its price has fallen relative to those goods.
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