alleryStart learning →A Giffen good is best described as which type of good?
- A luxury good
- An inferior good
- A public good
- A free good
Show answer and solution
Correct answer: B. An inferior good
A Giffen good is an inferior good whose demand rises when its price rises.
CA Foundation Law of Demand — practice questions — page 2
Explore 61 free Law of Demand questions in CA Foundation Business Economics. Open each question or exercise to read its content, reference answers and available explanation.
Practise Law of Demand with Quill →Law of Demand questions and exercises with answers
Showing questions 31–60 of 61.
A Giffen good is best described as which type of good?Read the answer and worked solution →Which staple is the classic example linked to the Great Famine of Ireland as a Giffen good?Read the answer and worked solution →Giffen goods violate the law of demand because which effect dominates?Read the answer and worked solution →Veblen goods such as diamonds and antiques are demanded more when their price rises because of what?Read the answer and worked solution →How do Veblen goods differ from Giffen goods in quality?Read the answer and worked solution →Which is listed among the exceptions to the law of demand?Read the answer and worked solution →Price elasticity of demand is the ratio of which two quantities?Read the answer and worked solution →A demand elasticity of -2 means a 1% price rise leads to what change in quantity demanded?Read the answer and worked solution →Price rises by 10% and quantity demanded falls by 20%. What is the magnitude of price elasticity?Read the answer and worked solution →Price falls by 20% and quantity demanded rises by 10%. Demand is then described as what?Read the answer and worked solution →A perfectly inelastic demand is represented by which kind of demand curve?Read the answer and worked solution →Which numerical value of price elasticity denotes perfectly inelastic demand?Read the answer and worked solution →If demand is unitary elastic, a change in price has what effect on total revenue?Read the answer and worked solution →For a relatively inelastic good, a price rise leads to what change in total revenue?Read the answer and worked solution →At which elasticity is total revenue maximised along a demand curve?Read the answer and worked solution →If demand is perfectly elastic, what happens when price is raised even slightly?Read the answer and worked solution →Which factor makes demand for a good more elastic?Read the answer and worked solution →Which good is likely to have the lowest elasticity of demand?Read the answer and worked solution →Demand for a necessity such as insulin for diabetics tends to be what?Read the answer and worked solution →For most goods, elasticity of demand over a longer time period is usually what?Read the answer and worked solution →Strong attachment to a particular brand tends to make demand more what?Read the answer and worked solution →Demand for goods bought on a corporate expense account is likely to be more what?Read the answer and worked solution →Along a straight-line demand curve, price elasticity of demand is what?Read the answer and worked solution →Cross elasticity of demand relates the quantity demanded of good A to the change in what?Read the answer and worked solution →Which elasticity measures the effectiveness of a campaign in generating new sales?Read the answer and worked solution →The price of tea rises 10% and coffee demand rises 5%. What is the cross elasticity of coffee with respect to tea?Read the answer and worked solution →When demand is perfectly inelastic, who bears the burden of a per-unit tax?Read the answer and worked solution →The party with fewer opportunities to avoid a tax usually bears what share of its burden?Read the answer and worked solution →Keynesian economics is sometimes called what?Read the answer and worked solution →A perfectly inelastic demand curve for a good is typical when the good has what?Read the answer and worked solution →
Worked practice questions
Which staple is the classic example linked to the Great Famine of Ireland as a Giffen good?
- Wheat
- Rice
- Potatoes
- Maize
Show answer and solution
Correct answer: C. Potatoes
Potatoes were the largest part of the Irish diet, so price rises forced cuts in meat and vegetables.
Giffen goods violate the law of demand because which effect dominates?
- Substitution over income
- Income over substitution
- Demonstration over both
- Advertising over price
Show answer and solution
Correct answer: B. Income over substitution
For an inferior good with a large budget share, the positive income effect outweighs the negative substitution effect.
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