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Exploring the Two Commodity World

Author

Listed:
  • Husain, Fazal

Abstract

This paper attempts to explore the nature of the goods in a Two Commodity world. The analysis suggests that the only possibility that the two goods have same income elasticity is the case when both goods have unit income elasticities. Moreover, if both the goods have equal income elasticities, then these goods will belong to the same category and will be in equal relation to each other. The analysis further suggests that if one of the good has zero income elasticity, it will always be a substitute to the other good which will always be an elastic good. These results are supported by the CES and Quasi-linear utility functions.

Suggested Citation

  • Husain, Fazal, 2001. "Exploring the Two Commodity World," MPRA Paper 5656, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:5656
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    File URL: https://mpra.ub.uni-muenchen.de/5656/1/MPRA_paper_5656.pdf
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    More about this item

    Keywords

    Consumer Behaviour; Demand Functions; Two Commodity; Utility Functions;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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