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A consumer initially maximizes utility at point A with income of Y=$200 spent on coffee and
biscuits. Then, suppose income increases, shifting the budget constraint from L1 to L2, where the
consumer maximizes utility at bundle B. Using the new level of income, calculate the income
elasticity. of coffee (coffee) between bundle A and bundle B. coffee=(
Enteranumericresponseusingarealnumberroundedtotwodecimalplaces.)

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A consumer initially maximizes utility at point A with incom.pdf

  • 1. A consumer initially maximizes utility at point A with income of Y=$200 spent on coffee and biscuits. Then, suppose income increases, shifting the budget constraint from L1 to L2, where the consumer maximizes utility at bundle B. Using the new level of income, calculate the income elasticity. of coffee (coffee) between bundle A and bundle B. coffee=( Enteranumericresponseusingarealnumberroundedtotwodecimalplaces.)