Suppose the demand function for a firm's product is given by In Qxd = 7 -1.5 In Px + 2 In Py-0.5 In M + In A 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 elastic. Own price elasticity: Demand is: (Click to select) b. Determine the cross-price elasticity of demand between good X and good Y, and state whether these two goods are substitutes or complements. Cross-price elasticity: These two goods are: (Click to select) c. Determine the income elasticity of demand, and state whether good X is a normal or inferior good. Income elasticity: Good X is: (Click to select) d. Determine the own advertising elasticity of demand.
Suppose the demand function for a firm's product is given by In Qxd = 7 -1.5 In Px + 2 In Py-0.5 In M + In A 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 elastic. Own price elasticity: Demand is: (Click to select) b. Determine the cross-price elasticity of demand between good X and good Y, and state whether these two goods are substitutes or complements. Cross-price elasticity: These two goods are: (Click to select) c. Determine the income elasticity of demand, and state whether good X is a normal or inferior good. Income elasticity: Good X is: (Click to select) d. Determine the own advertising elasticity of demand.
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...
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Transcribed Image Text:Suppose the demand function for a firm's product is given by In Qxd = 7 -1.5 In Px + 2 In Py-0.5 In M + In A 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 elastic.
Own price elasticity:
Demand is: (Click to select)
b. Determine the cross-price elasticity of demand between good X and good Y, and state whether these two goods are substitutes or complements.
Cross-price elasticity:
These two goods are: (Click to select)
c. Determine the income elasticity of demand, and state whether good X is a normal or inferior good.
Income elasticity:
Good X is: (Click to select)
d. Determine the own advertising elasticity of demand.
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