Question

Which of the following are true or false?

a) The Giffen good is considered not an exception to the law of demand
b) The Giffen effect was first observed by Thorstein Veblen

• A. Both (a) and (b) are true
• B. (a) is true, but (b) is false
• C. (a) is false, but (b) is true
• D. Both (a) and (b) are false

Answer 1

The correct option is D Both (a) and (b) are false

a) The Giffen good is considered not an exception to the law of demand- It is a true statement since positive relationship between price and demand is observed in case of Giffen good.
b) The Giffen effect was first observed by Thorstein Veblen- This is a false statement since the Giffen effect is first observed by Sir Robert Giffen.