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For Most Goods and Services, Income Elasticity of Demand Tends

Question 127

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For most goods and services, income elasticity of demand tends to be smaller in the short run than in the long run. However, a recent study shows that the demand for a durable good such as automobiles tends to be more income-elastic in the short run than in the long run. Explain why.

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Since durable goods are typically consum...

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