DOES AN INCREASE IN THE PRICE OF A NECESSITY REDUCE WELFARE MORE THAN AN EQUIVALENT INCREASE IN THE PRICE OF A LUXURY,
RAND CORP SANTA MONICA CALIF
Pagination or Media Count:
Consideration is given to the question of whether it is correct to suppose that an increase in the cost of a necessity reduces welfare more than an equivalent price increase in another commodity. It is shown that the answer is no -- the price increase which causes the greater decrease in welfare is independent of which good is a necessity, if necessity is given any usual meaning such as low income elasticity or low price elasticity.
- Economics and Cost Analysis