Question: Suppose demand for good A is given by = 500 10 + 2 + 0.70 where PA is the price of good A, PB is

Suppose demand for good A is given by = 500 10 + 2 + 0.70 where PA is the price of good A, PB is the price of some other good B and Y is income.Assume that PA is currently R10, PB is currently R5, and I is currently R100.a. What is the elasticity of demand for good A with respect to the price of good A at the current situation? b. What is the cross-price elasticity of the demand for good A with respect to the price of good B at the current situation? c. What is the income elasticity of demand for good A at the current situation?

2. You are given the following production function: = 22

Where Q is output, K is capital and L is Labour.

(a) Derive the Marginal Product of Capital (b) Derive the Marginal Product of Labour (c) You might think that when a production function has a diminishing marginal rate of technical substitution of labour for capital, it cannot have increasing marginal products of capital and labour.Show that this is not true, using the production function given with the corresponding marginal products derived

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