Determine the own price elasticity of demand, and state whether demand is elastic, inelastic, or unitary elastic. Own price elasticity: -1.5 Demand is: elastic 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: 2 These two goods are: Substitutes. c. Determine the income elasticity of demand, and state whether good Xis a normal or inferior good. Income elasticity: Good X is: d. Determine the own advertising elasticity of demand.
Suppose a research report has estimated the
Px = $15
Py = $6
M = $40,000, and
A = $350
a. Determine the own
Own price elasticity: -1.5
Demand is: elastic
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: 2
These two goods are: Substitutes.
c. Determine the income elasticity of demand, and state whether good Xis a normal or inferior good.
Income elasticity:
Good X is:
d. Determine the own advertising elasticity of demand.
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