a. Consider the following demand function Q. =50 -2P, +4P, -41 Suppose that price of good...

 

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a. Consider the following demand function Q. =50 -2P, +4P, -41 Suppose that price of good X is 5, price of good y is 2.5, and income is 10. Find the following, i. Own price elasticity of demand. [2 Marks) ii. Cross price elasticity of demand. [2 Marks] iii. Are X and Y substitute or complements? Explain. [2 Marks] iv. Income elasticity of demand for good X. [2 Marks) Is Xa normal good or inferior good? Explain. [2 Marks) v. Is Xa luxury good or a necessity good? Explain. [2 Marks) vi. b. The global economy has been shaken by the outbreak of the covid-19. With the aid of a clearly labelled diagram(s), explain what has happened to the market for face masks. [5 Marks] ii. Suppose that the price of face masks received a once-off increase, use a clearly labelled diagram to show the decomposition of this price change into [5 Marks) the income and substitution effect. iii. Are face masks inferior goods or normal goods? Why? [3 Marks) a. Consider the following demand function Q. =50 -2P, +4P, -41 Suppose that price of good X is 5, price of good y is 2.5, and income is 10. Find the following, i. Own price elasticity of demand. [2 Marks) ii. Cross price elasticity of demand. [2 Marks] iii. Are X and Y substitute or complements? Explain. [2 Marks] iv. Income elasticity of demand for good X. [2 Marks) Is Xa normal good or inferior good? Explain. [2 Marks) v. Is Xa luxury good or a necessity good? Explain. [2 Marks) vi. b. The global economy has been shaken by the outbreak of the covid-19. With the aid of a clearly labelled diagram(s), explain what has happened to the market for face masks. [5 Marks] ii. Suppose that the price of face masks received a once-off increase, use a clearly labelled diagram to show the decomposition of this price change into [5 Marks) the income and substitution effect. iii. Are face masks inferior goods or normal goods? Why? [3 Marks)