Ayushi posted an Question
August 11, 2020 • 18:04 pm 30 points
  • UGC NET
  • Economics

In order to generate very strong negative income effect, the proportion of income spent on a commodity should be (1) very large (2) very small (3) nil (4) moder

In order to generate very strong negative income effect, the proportion of income spent on a commodity should be (1) very large (2) very small (3) nil (4) moderate

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    Nidhi taparia Best Answer

    The answer is (1). To generate a strong negative income effect, proportion of income spent on commodity has to be very large. This is the case of Giffen goods.

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