Author Question: Which of the following describes the Giffen good case? When the price of the good A) rises, the ... (Read 55 times)

neverstopbelieb · **on:** Jul 1, 2018

Which of the following describes the Giffen good case? When the price of the good

A) rises, the income effect is opposite to and greater than the substitution effect, and consumption falls.
B) falls, the income effect is in the same direction as the substitution effect, and consumption rises.
C) falls, the income effect is in the opposite direction to the substitution effect, and consumption falls.
D) falls, the income effect is in opposite direction to the substitution effect and consumption rises.
E) Both A and D are correct.

Question 2

For most consumer goods, the price elasticity of demand is

A) negative only when price decreases.
B) negative regardless of the direction of the price change.
C) positive only when price decreases.
D) positive regardless of the direction of the price change.