A household's annual income increases from £30 000 to £31 500. All other things being equal, if the household's income elasticity of demand for Good A is -0.6 and its income elasticity of demand for Good B is 1.2, which one of the following statements is correct?
Spending on Good A will fall by £45 and spending on Good B will increase by £90
Spending on Good A will fall by £450 and spending on Good B will increase by £900
Spending on Good A will fall by 3% and spending on Good B will increase by 6%
Spending on Good A will fall by 30% and spending on Good B will increase by 60%
