Advanced Higher Economics Practice Questions - Scottish Advanced Higher Economics (C820 77) Exam

Which condition must be met for a good to be classified as a Giffen good?

It must be an inferior good with a negative income effect that outweighs the substitution effect It must be a luxury good with an income elasticity of demand greater than 1 It must be a normal good with a price elasticity of demand equal to zero It must be a substitute good with a positive cross-price elasticity of demand

Correct Answer:

It must be an inferior good with a negative income effect that outweighs the substitution effect

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