7.4 Suppose that ham and cheese are pure complements—they will always be used in the ratio of one slice of ham to one slice of cheese to make a sandwich. Suppose also that ham and cheese sandwiches are the only goods that a consumer can buy and that bread is free. Show that if the price of a slice of ham equals the price of a slice of cheese,

a. The own-price elasticity of demand for ham is — |; and

b. The cross-price elasticity of a change in the price of cheese on ham consumption is also -|.

c. How would your answers to

(a) and

(b) change if a slice of ham cost twice as much as a slice of cheese? {Hint: Use theSlutsky equation—what is the substitution elasticity here?)