Ann consumes five goods. The prices of all goods are fixed. The price of good x is

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Ann consumes five goods. The prices of all goods are fixed. The price of good x is px. She spends 25 percent of her income on good x, regardless of the size of her income.
a) Show that her income elasticity of demand of good x is the same for any level of income, and determine its value.
b) Would the value of the income elasticity of demand for x be different if Ann always spends 60 percent of her income on good x?
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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