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Define the term Normal goods, inferior goods, and giffen goods. |
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Answer» A normal good is that good in case of which there is a positive relationship between consumer’s income and quantity demanded. Implying that income effect is positive. An inferior good is that good in case of which there is a negative relationship between consumer’s income and quantity demanded. A giffen good is that good in case of which income effect is negative as well as greater than substitution effect. Implying that the law of demand fails. |
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