Expenditure on certain goods have increased

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Why is it that the expenditure on certain goods have increased even when income has declined and the price of these goods has increased also? A couple examples of this are in health care and transportation costs such as gas.

a. Can a Cobb-Douglas utility function answer this? Explain.

b. If not a Cobb-Douglas utility function, what kind of utility function can explain this best?

Reference no: EM131163850

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