Two Consumers, Eric and Eli, Have the Same Preferences for Good

question 466

Essay

Two consumers, Eric and Eli, have the same preferences for good X, a normal good.The only difference is that for Eli there would be no income effect if the price of good X were to change.For Eric, there are both income and substitution effects for a price change.What does this tell you about Eric's and Eli's demand for good X? Explain.

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Definitions:

Francisco Franco

A Spanish general who led the Nationalist forces to victory in the Spanish Civil War and governed Spain as a dictator from 1939 until his death in 1975.

Vichy Regime

The government of unoccupied France during World War II, collaborating with Nazi Germany from 1940 to 1944.

General Franco

A Spanish military leader who ruled as a dictator over Spain from 1939 until his death in 1975, after winning the Spanish Civil War.

Fascism

A far-right, authoritarian ultranationalism characterized by dictatorial power, forcible suppression of opposition, and strong regimentation of society and the economy.