<p>Since the question is asking for clarification on a given answer, I don't think this question necessarily needs to be closed. To address your concerns:</p>

<p>You will recall Walras' Law states $p \cdot x = w$. That is, you spend all your money buying things, given some regularity conditions. So just figure out how much was spent in year 1 and that will give you wealth for that period. For year 2, you'll note that depending on the range for $x^2_2$, it will imply the consumer having different amounts of wealth. That will give you the information you need to find where good 1 is inferior.</p>

<p>It might be helpful to think about what ranges of good 2 would violate WARP, and what the ranges above and below it would mean. Hope this helps.</p>

CC BY-SA 3.0
2016-11-14T18:06:06.803Z
2016-11-14T18:06:06.803Z
Kitsune Cavalry
<p>Given the following partial information about a consumer's purchases.He consumes only two goods.
<strong>In year 1</strong>, $p_1^1=p_2^1=100,x_1^1=x_2^1=100$</p>

<p><strong>In year 2</strong>, $p_1^2=100,p_2^2=80,x_1^2=120$</p>

<p>Over what range of quantities of good 2 consumed in year 2(i.e,$x_2^2$) could we conclude that good 1 is an inferior good.</p>

<p>I feel confused because I'm not informed the choices after a change in wealth under the same price system, neither under $(p_1^1,p_2^1)$ nor $(p_1^2,p_2^2).$ </p>

<p>But the solution given by my TA is :
Since $x_1^1&lt;x_1^2$, so we need $p^2x^1&gt;p^2x^2$, that gives $0&lt; x_2^2&lt; 75$. I don't know where this argument comes from and whether it is true or not. </p>

<p>Any help are going to be appreciated.</p>

<microeconomics><giffen-goods>
Identify whether a good is giffen good or not and under what condition
Rowan
# Identify whether a good is giffen good or not and under what condition

(Asked by: username_0 on 2016-11-10)

Given the following partial information about a consumer's purchases.He consumes only two goods.
**In year 1**, $p\_1^1=p\_2^1=100,x\_1^1=x\_2^1=100$

**In year 2**, $p\_1^2=100,p\_2^2=80,x\_1^2=120$

Over what range of quantities of good 2 consumed in year 2(i.e,$x\_2^2$) could we conclude that good 1 is an inferior good.

I feel confused because I'm not informed the choices after a change in wealth under the same price system, neither under $(p\_1^1,p\_2^1)$ nor $(p\_1^2,p\_2^2).$

But the solution given by my TA is :
Since $x\_1^1p^2x^2$, that gives $0< x\_2^2< 75$. I don't know where this argument comes from and whether it is true or not.

Any help are going to be appreciated.

**Tags:** microeconomics, giffen-goods

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## 1 answers

### Answer by username_1 on 2016-11-14. Score: 1

Since the question is asking for clarification on a given answer, I don't think this question necessarily needs to be closed. To address your concerns:

You will recall Walras' Law states $p \cdot x = w$. That is, you spend all your money buying things, given some regularity conditions. So just figure out how much was spent in year 1 and that will give you wealth for that period. For year 2, you'll note that depending on the range for $x^2\_2$, it will imply the consumer having different amounts of wealth. That will give you the information you need to find where good 1 is inferior.

It might be helpful to think about what ranges of good 2 would violate WARP, and what the ranges above and below it would mean. Hope this helps.


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