Microeconomic Theory 11th Edition by Walter Nicholson,Christopher Snyder

Exercise 2

Hard Times Burt buys only rotgut whiskey and jelly donuts to sustain him. For Burt, rotgut whiskey is an inferior good thatexhibits Giffen's paradox, although rotgut whiskey and jelly donuts are Hicksian substitutes in the customary sense. Develop anintuitive explanation to suggest why an increase in the price of rotgut whiskey must cause fewer jelly donuts to be bought. Thatis, the goods must also be gross complements.