Question

Michael likes artisan bread and will drive to multiple stores to find his favorite brand. His brother, Matthew, loves bread but doesn't care about brands. For Michael, bread is a ________ good while for Matthew it is a ________ good

Answer 1

Bread is a Giffen good for Michael and a normal good for Matthew.

Step-by-step explanation:

For Michael, bread is a Giffen good while for Matthew it is a normal good.

A Giffen good is a type of inferior good for which, as the price increases, so does the quantity demanded. This is often due to extreme income effects. In the case of Michael, his strong preference for a specific brand of artisan bread causes him to drive to multiple stores and pay a higher price for it.

On the other hand, Matthew's indifference towards specific brands of bread means that he prefers bread for its basic qualities and is not willing to pay extra for a particular brand. Therefore, for him, bread is a normal good.