Q2 1. All answers should be submitted in a Word document file upload. First, what are the factors thatinfluence "own price" elasticity of demand? In other words, what is likely to make us responsiveto price changes? When are we more likely to ignore price changes, and keep buying roughly thesame quantity of an item even when its price changes?2. Now, choose a good or service and find at least one source where its price elasticity of demandis estimated. Is the demand elastic? Do the results surprise you? Why or why not? What couldhappen to change this elasticity? Include the source of your information.3. Let's do a quick calculation. If the price of good X increases by 10%, and the quantity demandedof good X decreases by 7%, calculate X's elasticity of demand. Interpret your result.4. Now, what if the price of good Y increases by 10%, and the quantity demanded of good Xdecreases by 7%. Calculate the cross-price elasticity of demand. What does this mean about therelationship between goods X and Y? Explain in detail.5. Now suppose that income increases by 10% and the quantity demanded of good X decreases by7%. Calculate the income elasticity of demand and interpret the result. What does this say aboutgood X? Please submit all answers in a Word document file upload.

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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