<p>Question:
There are a total of 5 different goods produced and consumed in the economy. Two of these goods, X and Y, are perfect substitutes. Which of the following statements are true?</p>
<ol>
<li>X can be a normal good</li>
<li>X can be an inferior good</li>
<li>X can be a Giffen good</li>
</ol>
<p>My attempt:
I tried to think about XED, but it did not seems to relate to normal, inferior and Giffen goods. I also considered indifference curve but it did not yield any result as well. The answer is (1) and (2), but I have no clues about how to approach this question.
Thank you in advance for your help!</p>

CC BY-SA 4.0
2023-12-31T09:38:02.333Z
Hi! Do you know a definition for "*perfect substitute*" and "*Giffen good*"?
Giskard
CC BY-SA 4.0
2023-12-31T13:40:39.750Z
@Giskard I think I do. Perfect substitute is basically two goods that are perfectly interchangable (so people will always choose the cheaper one). A Giffen good is a type of good where the negative income effect outweights the substitution effect. So do you mean that when price of X decreases, the demand of X must increase, so it can not possibly be a Giffen Good?
ZZZ
CC BY-SA 4.0
2023-12-31T16:11:10.450Z
You could be a bit more rigorous, but that's the essential idea.
Giskard
CC BY-SA 4.0
2023-12-31T16:34:16.367Z
O, OK, thank you very much! I am still a high school student, so I don't really know much about rigorous definitions/formula for economic concepts. Do you have any recommendations for economic textbooks? (I probably will major economics in university) Again, I really appreciate your help!
ZZZ
CC BY-SA 4.0
2024-01-01T01:00:11.737Z
I am very much in the minority with my opinion but I would recommend choosing a different major.
Giskard
CC BY-SA 4.0
2024-01-01T12:33:59.347Z
If you insist on majoring in economics (your life, your choice), there are [several book recommendation questions on this SE](https://economics.stackexchange.com/search?q=book) that you can browse.
Giskard
CC BY-SA 4.0
2024-01-01T14:19:09.387Z
OK, thank you very much for your advice. I will consider it thoroughly before next year's application.
ZZZ
<giffen-goods><perfect-substitutes>
How can I determine the potential nature of goods in an economy, given that they are perfect substitute?
ZZZ
# How can I determine the potential nature of goods in an economy, given that they are perfect substitute?

(Asked by: username_0 on 2023-12-31)

Question:
There are a total of 5 different goods produced and consumed in the economy. Two of these goods, X and Y, are perfect substitutes. Which of the following statements are true?

1. X can be a normal good
2. X can be an inferior good
3. X can be a Giffen good

My attempt:
I tried to think about XED, but it did not seems to relate to normal, inferior and Giffen goods. I also considered indifference curve but it did not yield any result as well. The answer is (1) and (2), but I have no clues about how to approach this question.
Thank you in advance for your help!

**Tags:** giffen-goods, perfect-substitutes
> **Comments:**
> **username_1**: Hi! Do you know a definition for "*perfect substitute*" and "*Giffen good*"?  
> **username_0**: @Giskard I think I do. Perfect substitute is basically two goods that are perfectly interchangable (so people will always choose the cheaper one). A Giffen good is a type of good where the negative income effect outweights the substitution effect. So do you mean that when price of X decreases, the demand of X must increase, so it can not possibly be a Giffen Good?  
> **username_1**: You could be a bit more rigorous, but that's the essential idea.  
> **username_0**: O, OK, thank you very much! I am still a high school student, so I don't really know much about rigorous definitions/formula for economic concepts. Do you have any recommendations for economic textbooks? (I probably will major economics in university) Again, I really appreciate your help!  
> **username_1**: I am very much in the minority with my opinion but I would recommend choosing a different major.  
> **username_1**: If you insist on majoring in economics (your life, your choice), there are [several book recommendation questions on this SE](https://economics.stackexchange.com/search?q=book) that you can browse.  
> **username_0**: OK, thank you very much for your advice. I will consider it thoroughly before next year's application.  

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## 0 answers

