ECO352H5 Lecture Notes - Lecture 2: Poverty Trap, Blood Plasma, Ernst Engel
Document Summary
Ernst engel = german economist that measures what people are consuming and how their budget gets allocated across different goods. Engle curve = relationship between expenditure / consumption of good and. Lecture 2: january 11 total resources of household. Food expenditure = f , total expenditure = y, hence food budget share f/y: income elasticity of food : fy. =luxury ( > 1), necessity ( < 1), normal good ( > 0), inferior good ( < 0) *basic food might be inferior because as income goes up your consumption of that food goes down. Engle curve application: absolute nutrition based poverty line. Absolute: minimum income to buy a specific bundle of goods (only varies with prices), often based on nutrition recommendations usa: cost of cheapest. Nutritionally adequate basket in 1963, multiplied by 3 (average hh spent 1/3 of budget on food), updated for inflation /day/person for 4 person household.
