The sum of income elasticity of demand, own price elasticity of demand and cross price elasticity of…
The sum is zero, by the homogeneity property of demand. Proportionately increasing income and all prices leaves purchasing power and the chosen quantities unchanged, so the…
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The sum of income elasticity of demand, own price elasticity of demand and cross price elasticity of demand is
Answer and explanation
Correct answer C
The sum is zero, by the homogeneity property of demand. Proportionately increasing income and all prices leaves purchasing power and the chosen quantities unchanged, so the income elasticity plus the signed price elasticities sum to zero.
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West Bengal SET (WB SET)