Suppose you are thinking of investing in a poor country to sell technology goods and want to know the potential income elasticity of for goods other than food (F). Assume the budget share for food is N and the income elasticity for food is between 0 and 1.
a. Write out the weighted income elasticity for two goods (F and O) and solve it for income elasticity of other goods.
b. Derive the upper and lower bounds if N equals 0.75 and the income elasticity for food is between zero and one.