Question

Engel curve for a giffen good is ______​

Answer 1

An Engel curve is a graph that shows how quantity consumed changes with change in income. It is plotted with income on y-axis and quantity consumed on x-axis.

One of the determinants of demand is consumer income. A change in income can cause a shift in demand curve. In case of a normal good, an increase in income increases demand and causes an outwards (right-ward) in the demand curve. But in case of an inferior good, an increase in income decreases demand and shifts the demand curve inwards (left-ward). An Engel curve captures this relationship between income and demand.

Since in case of a normal good, quantity demand increases with increase in income. This causes the Engel curve to have a positive slope. On the other hand, in case of an inferior good, the Engel curve has negative slope.

Answer 2

Explanation:

 · An Engel curve captures this relationship between income and demand. Since in case of a normal good, quantity demand increases with increase in income. This causes the Engel curve to have a positive slope. On the other hand, in case of an inferior good, the Engel curve has negative slope.