Ernest's Income Elasticity of Demand for Natural Gas Is 0

question 1

Multiple Choice

Ernest's income elasticity of demand for natural gas is 0.4. His price elasticity of demand for natural gas is -0.3, and he spends 10% of his income on natural gas. What is his substitution price elasticity?

• A) -.26
• B) -.34
• C) .20
• D) -.12
• E) None of the above.

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