Question

all giffen goods are inferior goods but allinferior goods are not giffen goods.discuss

Answer 1

All Giffen goods are inferior.

 

The income effect for a Giffen good must be negative; that is demand increases when there is a fall in income.

 

It should be strong enough to offset the substitution effect whereby higher prices will make consumers to switch away from this good.

 

 Not all inferior goods will be Giffen goods too; if the income effect is small relative to the substitution effect, a usual shaped demand curve results.