The objective of this study was to investigate the demand of food and nonfood commodities among urban and rural households. To this aim, an appropriate functional form and approximation index were established. Then, Deaton and Mulbaer Iterative (DMI) approach as a linear approximation of Almost Ideal Demand System was used. The study horizon was also 1362-1383(1983-2004). The findings revealed that for urban households housing, fuel, power and furniture, household operations and entertainment, education and food, beverages, tobacco are considered necessary. While clothing, footwear and medical care and transport, communication and other goods are consumed as superior commodities. For urban households, a weak complementary and substitution relation among selected commodities was recognized. In the case of rural households clothing, footwear and food, beverages, tobacco were revealed to be necessary, while housing, fuel, power and medical care and entertainment, education were found superior. For the rural households only furniture and house operation was found elastic. The compensated and uncompensated self price elasticizes were similar regarding the sign and magnitude coefficients for rural and urban households.

Keywords: Demand, Almost ideal demand system, Price elasticity, Households expenditure.

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