CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

One characteristic of a Giffen good is that ______
A. it is a luxury good.
B. it is an inferior good.
C. it has an upward-sloping demand curve.
Explanation: All Giffen goods must be inferior, but not all inferior goods are Giffen goods.

User Contributed Comments 6

User Comment
asalonga7 I thought giffen goods had upward sloping demand curves as well
sjberard The notes state that a giffen good has an upward sloping demand curve
alles B is correct. But C is also correct. Or having an upward-sloping demand curve is not a "characteristic"?
CWade10 Read between the lines of this LOS a bit. After explanation of a Giffen good's demand curve (upward sloping) it states that there is another case where demand curve is upward sloping (Veblen good)

All Giffen goods are inferior so B is satisfied.

An upward sloping demand curve can be the product of a Giffen good OR a Veblen good. Therefore if you were given an upward sloping demand curve, this alone wouldn't tell you it is a giffen good.
houstcarr right wade but that's not at all what this question is asking. it just asked for a characteristic of a giffen good, B and C are both correct.
bemccall95 How they should have said it is "One characteristic that describes a Giffen good but NOT a Veblen good is...."
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