Question: The Smith Company estimates that the demand function for its product is Q =500 -3P + 2Pr + 0.1I, where Q is the quantity demanded

The Smith Company estimates that the demand function for its product is Q =500 -3P + 2Pr + 0.1I,

where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival's product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000.

a. What is the price elasticity of demand for the firm's product?

b. What is the income elasticity of demand for the firm's product?

c. What is the cross-price elasticity of demand between its product and its rival's product?

d. What is the implicit assumption regarding the population in the market?

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