Question: Hello! I need help with this! Thank you! Question #2 - Elasticities for Log-Linear Demand Functions The log-linear demand function for good X is: ln

Hello! I need help with this! Thank you!

Question #2 - Elasticities for Log-Linear Demand Functions The log-linear demand function for good X is: ln Qdx = 21 - 0.8*ln Px - 1.6*ln Py + 6.2*ln M Good Y is a related good in consumption for good X. M denotes the average consumer's income. Assume that Py = $2 and M = $10. a. Is good X elastic, unitary elastic, or inelastic? Explain briefly. b. Suppose that the price of good Y increases by 5%. How would this affect the consumption of good X? c. Consumer incomes decreased due to a recent recession and this caused the consumption of good X to decrease by 20%. Based on this information, how much did the average consumer's income decrease (in percentage terms)?

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