Question: QUESTION 7 [6m] The demand function of a good is given by Q = 100 2P + 3PA + 0.18 where Q,P, PA, and Y

QUESTION 7 [6m] The demand function of a good is given

QUESTION 7 [6m] The demand function of a good is given by Q = 100 2P + 3PA + 0.18 where Q,P, PA, and Y denote quantity demanded, price of the good, price of an alternative good and income, respectively. Given that P = 20, PA 15 and Y = 300. i. ii. iii. Find the income elasticity of demand. Estimate the percentage change in demand if income rises by 5%. Is this good classified as inferior or normal or superior? (4m) (lm) (1m)

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