if the income effect = 8 and substitution effect = 12, is the good a normal/inferior/giffen good? Explain your answers.

Question

Question

business economics

Answer 1

Answer #1

For giffen goods income effect is greater than substitution effect.

For inferior goods substitution effect is greater than income effect.

Thus,the good in this case is inferior good.

Answer-Inferior good.

Answer 2

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