To answer: The questions based on the given situations Concept Introduction: Giffen good: This is a type of good in which the individuals consume more of the good when the price increases. Substitution effect: This is an economic theory in which when the price rises or the income of the people falls people will substitute the dearer goods with less expensive alternative goods. Income effect: This is described as the change in the quantity of goods and services due to a change in the income of the people.

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Chapter 10, Problem 12P

To determine

To answer:

The questions based on the given situations

Concept Introduction:

Giffen good: This is a type of good in which the individuals consume more of the good when the price increases.

Substitution effect: This is an economic theory in which when the price rises or the income of the people falls people will substitute the dearer goods with less expensive alternative goods.

Income effect: This is described as the change in the quantity of goods and services due to a change in the income of the people.

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