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(Solved): (a) Decompose price effect into substitution and income effects when good 1 is giffen good. (b) Deco ...


(a) Decompose price effect into substitution and income effects when good 1 is giffen good.

(b) Decompose price effect into substitution and income effect according to slutsky and Hicks.



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A) Giffen goods - A Giffen good is a low income, non-luxury product that defies standard economic and consumer demand theory. Demand for Giffen goods rises when the price rises and falls when the price falls. Decompose of price effect into substituti
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