Suppose a consumer had an income of $100 and spends $50 on potatoes. Suppose now that his income goes up to $150, and his spending on potatoes goes up to $100. No prices have changed (so the quantity of potatoes purchased doubled). Compute the consumer’s income elasticity for potatoes.
Suppose a consumer had an income of $100 and spends $50 on potatoes. Suppose now that his income goes up to $150, and his spending on potatoes goes up to $100. No prices have changed (so the quantity of potatoes purchased doubled). Compute the consumer’s income elasticity for potatoes.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter6: Consumer Choices
Section: Chapter Questions
Problem 15CTQ: Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the...
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- Suppose a consumer had an income of $100 and spends $50 on potatoes. Suppose now that his income goes up to $150, and his spending on potatoes goes up to $100. No prices have changed (so the quantity of potatoes purchased doubled). Compute the consumer’s income elasticity for potatoes.
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