Question: A market demand is given by QA = 200 - 3.5PA + 2.5PB + 0.04M, where QA is the quantity demanded of good A, PA
A market demand is given by QA = 200 - 3.5PA + 2.5PB + 0.04M, where QA is the quantity demanded of good A, PA is good A's price, PB is good B's price, and M is the average good A's consumer monthly income. If PA = $12, PB = $10, and M = $2,500 a. calculate good A's (point) own-price elasticity. b. calculate good A's (point) cross-price elasticity. c. calculate good A's (point) income elasticity. d. Are A and B complements or substitutes? Explain how you know. e. Is A normal or inferior good? Explain how you know
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