Anand consumes lesser units of good X when its price falls and lesser units of X when his income rises. Which of the following statements is true about good X.

Good X is both inferior and Giffen good for Anand.

The correct answer is Option (4) → Good X is both inferior and Giffen good for Anand.

• When the price of X falls, Anand consumes less of it. → This means demand decreases as price decreases, which violates the law of demand — a characteristic of a Giffen good.

• When income rises, Anand consumes less of X. There are some goods the demands for which move in the opposite direction of the income of the consumer. Such goods are called inferior goods. 

• All Giffen goods are inferior but not all inferior goods are giffen.

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