Question

Explain in your own words, in one paragraph, why every Giffen good is an inferior good,but not every inferior good is a Giffen good.

Answer 1

giffen goods are highly inferior goods, the main difference lies in the intensity of the income effect, in giffen goods the income effect basically overcomes the substitution effect which isnt the case with inferio goods, in case of inferior goods the substitution effect is more powerful then the income effect, thus there is negative price elasticity unlike the giffen goods.

thus all giffen good is inferior but all inferior is not giffen because both has negative income elasticity but the strength of income elasticity of giffen good is much higher that it leads to violation of law of demand.