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Exploring the Two Commodity World


  • Husain, Fazal


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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    References listed on IDEAS

    1. John Y. Campbell & Pierre Perron, 1991. "Pitfalls and Opportunities: What Macroeconomists Should Know About Unit Roots," NBER Chapters,in: NBER Macroeconomics Annual 1991, Volume 6, pages 141-220 National Bureau of Economic Research, Inc.
    2. Cuddington, John T. & Urzua, Carlos M., 1989. "Trends and cycles in Colombia's real GDP and fiscal deficit," Journal of Development Economics, Elsevier, vol. 30(2), pages 325-343, April.
    3. Levitt Steven & Mauricio Rubio, 2000. "Understanding crime in Colombia and what can be done about It," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 003735, FEDESARROLLO.
    4. Dinar, Ariel & Keck, Andrew, 1997. "Private irrigation investment in Colombia: effects of violence, macroeconomic policy, and environmental conditions," Agricultural Economics, Blackwell, vol. 16(1), pages 1-15, March.
    5. Nicholas Sambanis, 2002. "A Review of Recent Advances and Future Directions in the Quantitative Literature on Civil War," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(3), pages 215-243.
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    More about this item


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

    JEL classification:

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


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