Microeconomics - University of Boston

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4. If Cassandra bought 16 cotton blouses last year when her income was $40,000 and she buys 24 cotton blouses this year when her income is $50,000, then what is her income elasticity of demand? Interpret what the income elasticity of demand you just calculated means to you. Also, are cotton blouses normal goods or inferior goods? Why? Will the demand curve shift rightward or leftward if cotton blouses are normal goods or inferior goods? Are cotton blouses income elastic, income inelastic or unit elastic? Why?

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