Thomas can two goods he can buy, good 1 and 2, and has M dollars in income. Derive the demand curve for Thomas for good 1 if good 1 is a Giffen good. Explain how this can be possible? Can Thomas’s demand curves for both goods be Giffen goods? Explain.

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A Giffen good is a rare and counterintuitive economic phenomenon where the demand for a good increases as its price rises violating the basic law of d... View the full answer