1 When Alex's income was $3,000, he bought 4 bagels and 12 donuts a month Now his income is $5,000 and he buys 8 bagels and 6 donuts a month Calculate Alex's income elasticity of demand forBagels andDonuts 2 Wal Mart's Recession Time Pet Project During the recession, Wal Mart moved its pet food and supplies to the front with its other fast growing business, baby products Retail experts point out that kids and pets tend to be fairly recession resistant businesseseven in a recession, dogs will be fed and kids will get their toys Source CNN, May 13, 2008 a) What does this news clip imply about the income elasticity of demand for petfood and baby products b) Would the income elasticity of demand be greater or less than 1 Explain

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1  When Alex's income was $3,000, he bought 4 bagels and 12 donuts a month  Now his income is $5,000 and he buys 8 bagels and 6 donuts a month  Calculate Alex's income elasticity of demand forBagels andDonuts  2 Wal Mart's Recession Time Pet Project During the recession, Wal Mart moved its pet food and supplies to the front with its other fast growing business, baby products  Retail experts point out that kids and pets tend to be fairly recession resistant businesseseven in a recession, dogs will be fed and kids will get their toys  Source  CNN, May 13, 2008 a) What does this news clip imply about the income elasticity of demand for petfood and baby products  b) Would the income elasticity of demand be greater or less than 1  Explain

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1. When Alex's income was $3,000, he bought 4 bagels and 12 donuts a month. Now his income is $5,000 and he buys 8 bagels

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