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Suppose for three years income has been increasing and the income elasticity of demand for ACME tools is 0.3.
a. What will the change in the number of ACME tools being purchased be, if the rise in income over the past 3 years has been 10%. (Show graphically as well as providing a number.)
b. Are ACME tools an inferior or a normal good?
c. If forecasters are predicting that income will continue to rise in the next year, can ACME expect their sales to rise as well?
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