Answer to Question #312956 in Microeconomics for Chibi

Question #312956

With the aid of a diagram, explain why all giffen goods are inferior but not all inferior goods are given.

Expert's answer

For a good to be a giffen good, the positive income effect should outweigh negative substitution effect to actually violate law of demand. Hence that is the reason we refer to all giffen goods as inferior good but not all inferior goods are giffen.

The diagram below explains this

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