Nadia consumes two goods, food and clothing. The price of food is $2,the price of clothing is $5,and her income is $1,000. Nadia always spends 40 percent of her income on food regardless of the price of food, the price of clothing, or her income. 1. What is her price elasticity of demand for food? 2. What is her cross-price elasticity of demand for good with respect to the price of clothing?

Principles of Economics 2e
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Chapter6: Consumer Choices
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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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Nadia consumes two goods, food and clothing. The price of food is $2,the price of clothing is $5,and her income is $1,000. Nadia always spends 40 percent of her income on food regardless of the price of food, the price of clothing, or her income.

1. What is her price elasticity of demand for food?

2. What is her cross-price elasticity of demand for good with respect to the price of clothing? 

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