Martin:

Thanks for your interesting contributions to the site. I'm sure others appreciate them as much as I do.

On problem 1.49(a), you make an interesting point: if we take the phrase "consumes a single good" to mean that the consumer consumes only the good $x$, then you rightly observe that the income elasticity of demand for $x$ must be unity. However, that's not what we intended that phrase to mean.

Instead, think of $x$ as one of many goods in the consumer's budget, but let it be the "single good" on which we want to focus our attention. Writing indirect utility as a function of that good's price and income, alone, is a (perhaps confusing?) way to indicate that we intend to focus on demand for that good alone, assuming that the prices of all other goods remain fixed.

Thus, for example, if the single good of interest is good 1, the notation v(p,y) should be viewed as a short-hand for
v(p_1,p_2^0, p_3^0...p_n^0,y) where the "^0" indicates fixed values for the other goods' prices.

In the next revision of the text I'll look for a better way to phrase the first part of that question to avoid this confusion.

Thanks for bringing it to my attention, and keep your contributions coming.


GAJ