Given the demand function Q = 200 2P P A + 0.1Y 2 where P
Question:
Given the demand function Q = 200 − 2P − PA + 0.1Y2 where P = 10, PA = 15 and Y = 100, find
(a) the price elasticity of demand;
(b) the cross-price elasticity of demand;
(c) the income elasticity of demand.
Estimate the percentage change in demand if PA rises by 3%. Is the alternative good substitutable or complementary?
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Step by Step Answer:
a b c When P 10 P 20 and Y 100 we have Q1165 PQ10 20 4 233 Hence Ep aQ PA ...View the full answer
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