Demand Relationships Among Goods

2 can be a gross complement for x 1. This results from the income effect. • If one good is important in total consumption (high proportion of expenditures), it may have a large income effect, and if the other good is unimportant in total consumption (small proportion of expenditures), it may have a small income effect. 2 x 1 2 x 1 p x p x ................
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