Practise IB Economics HL 2.1.5 by explaining how income, tastes, prices of related goods and expectations shift demand using marked exam evidence.
The table below shows data for price elasticity of demand and income elasticity of demand for seven product groups in Argentina in 2008.
There are concerns about rising food prices and their impact on households. Economists have forecast that rising food prices may have a negative effect on the demand for goods in other product groups.
The cross price elasticity between housing and house furnishing was estimated to be equal to -0.4 . Using this cross price elasticity data, explain the possible impact that an increase in house prices might have on the demand for house furnishing.