Home Depot Earnings Hammered As gas and food prices increased and home prices slumped, people had less extra income to spend on home improvements. And the improvements that they made were on small inexpensive types of repairs and not major big-ticket items. Source: CNN, May 20, 2008 a. What does this news clip imply about the in- come elasticity of demand for big-ticket home-improvement items? b. Would the income elasticity of demand be greater or less than 1? Explain.

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