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    Question

    What is the slope of the Engel curve for a Giffen good?

    A Negatively sloped Correct Answer Incorrect Answer
    B Positively sloped Correct Answer Incorrect Answer
    C Vertical Correct Answer Incorrect Answer
    D Horizontal Correct Answer Incorrect Answer

    Solution

    For a Giffen good, as income increases, the quantity demanded actually decreases because these goods are inferior goods with a strong income effect that outweighs the substitution effect. Therefore, the Engel curve, which shows the relationship between income and the quantity demanded, is negatively sloped for a Giffen good.

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