Question: Suppose the demand function for a firm's product is given by lnQx d = 7 - 1.5lnPx + 2lnPy - 0.5ln M + lnA where

Suppose the demand function for a firm's product is given by

lnQxd = 7 - 1.5lnPx + 2lnPy - 0.5ln M + lnA

where

Px = $15

Py= $6

M= $40,000 and

A = $350

a.Determine the own price elasticity of demand, and state whether demand is elastic, inelastic or unitary elatics.

b.Determine the cross price elasticity of demand between good x and good Y and state whether these 2 goods are substitutes or complements?

c.Determine the income elasticity of demand and state whether good X is a normal or inferior good?

d.Determine the own advertising elasticity of demand?

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