# Suppose for a country all goods and services are classified into three groups (1) Durable…

Suppose for a country all goods and services are classified into three groups (1) Durable (D) goods (2) Non-durable (N) goods and (3) Services (S). From the household consumption survey, we know that their respective shares in total consumption are SD=0.3, SN=0.45, SS=0.25.

1. If the income elasticity of demand for Durable goods (mainly housing) is 1.2 and for Non-Durable goods (food, clothing) is 0.50, what is the income elasticity of demand for Services?
1. If you know that the compensated own-price elasticity of demand for durable goods is -1.0, for non-durable goods is -0.6, and the compensated own-price elasticity of demand for services is -1.2. What are the uncompensated own-price elasticity of demand for these three goods?
1. If you know from part b that compensated own-price elasticity of demand for durable goods is -1.0 and you also know that the compensated cross-price elasticity for durable goods with respect to the prices of non-durable goods is 0.45, what is the compensated cross price elasticity of demand for durable goods with respect to the price of services?
1. Using the information from part c, what is the compensated cross price elasticity of demand for non-durable goods with respect to the price of durable goods? What is the compensated cross price elasticity of demand for services with respect to the price of durable goods?
1. What is the marginal propensity to consume for Durable goods, Non-durable goods, and Services?
1. If you know that the own-price elasticity of demand of non-durable goods is -0.6 (given in part b) and the compensated cross-price elasticity of non-durable goods with respect to durable goods is found by your answer to first part of part d, what is the compensated cross price elasticity of demand for non-durable goods with respect to the price of services?
1. What is the uncompensated cross price elasticity of demand for durable goods with respect to the price of non-durable goods? What is the uncompensated cross price elasticity of demand for services with respect to durable goods?