Slutsky and Hicks Decompositions - Giffen and Inferior Good

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Made by Dr. Jens Peter Siebel with GeoGebra.

The utility function here has been originally proposed by Spiegel (1994). Note that X is not only a Giffen good but also an inferior good. We see that the income effect overcompensates the substitution effect here.

In general: Any Giffen good is an inferior good, but not any inferior good is a Giffen good.

References:
Spiegel, U. 1994. The case of a "Giffen Good", Journal of Economic Education 25, 137 - 147.

Last update: 04/05/2011