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      Question

      A Giffen good is characterized by:

      A Positive income elasticity and substitution effect dominates income effect Correct Answer Incorrect Answer
      B Being a luxury item with elastic demand Correct Answer Incorrect Answer
      C A positive relationship between price and quantity demanded Correct Answer Incorrect Answer
      D A negative cross-price elasticity with its substitute Correct Answer Incorrect Answer

      Solution

      Explanation: A Giffen good is an inferior good where the negative income effect outweighs the substitution effect, causing demand to rise with price.

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