The demand curve for a Giffen good is

A. upward rising
B. downward falling
C. parallel to the quantity axis
D. parallel to the price axis
Answer» A. upward rising
Explanation: A Giffen good is a good whose consumption in-creases as its price increases. (For a normal good, as the price increases, consumption decreases.) Thus, the demand curve will be upward instead of down-ward sloping. A Giffen good has an upward sloping demand curve because it is exceptionally inferior. It has a strong negative income elasticity of demand such that when a price changes the income effect outweighs the substitution effect and this leads to perverse demand curve.
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