Question: 6. Suppose the demand function for a rm's product is given by the following: Qxd = 20 1.5Px + 2?}; -2.5Pz + lncome Where, PX

 6. Suppose the demand function for a rm's product is givenby the following: Qxd = 20 1.5Px + 2?}; -2.5Pz + lncome

6. Suppose the demand function for a rm's product is given by the following: Qxd = 20 1.5Px + 2?}; -2.5Pz + lncome Where, PX = $10 P? = $8 P2 = $5 Income = $10,000 Show work. (20 marks} a) Given the above prices, what is the quantity purchased?(2} 1)) Determine the own-price elasticity of good x.{2} c) Is demand elastic, inelastic or unit elastic?[2) d) If the price of good it increased by 10%, what would he the change in sales?[2) e) Determine the cross-price elasticity of demand between good it and good FIE} f} If the price of Y increased by 10%, what would be the change in sales of KHZ) g) Are these two goods substitutes or complements?(2} h) Determine the income elasticity of demand for good X12} i} Is X normal or inferior?(2} j] If income s increased by 20%, what would be the change in sales of good X? (2}

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!