Suppose Ramen Is a Giffen Good and the Price of Ramen

question 150

Multiple Choice

Suppose ramen is a Giffen good and the price of ramen decreases.Then the:

• A)substitution effect will cause a decrease in the consumption of ramen.
• B)income effect will cause a decrease in the consumption of ramen.
• C)income effect will reinforce the substitution effect, and the consumption of ramen will decrease.
• D)demand curve for ramen will still be downward-sloping.

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Definitions:

Raw Materials

Basic materials that are used in the production of goods, finished products, or intermediate materials that are feedstock for future finished products.

Labour

The human work effort, both physical and mental, used in the production of goods and services.