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Consider this paradox: Income elasticity is supposed to measure the responsiveness of consumption to changes in income. But income elasticity is unity along any Engel
Consider this paradox: Income elasticity is supposed to measure the responsiveness of consumption to changes in income. But income elasticity is unity along any Engel Curve that is a straight line through the origin, whether very steep or very flat. Since Engel Curves of different steepness surely show different responses of consumption to income, how can they all be characterized as having the same income elasticity?
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