First suppose the market demand for “cougar caps” is given by the equation: Q = a1 + a2 * P - a3 * P2 + a4*I where P is the price of cougar caps, I is income, Q is quantity of cougar caps and a1, a2, a3, a4 are positive constants. What is the price elasticity of demand? What conditions need to hold for this to be an elastic demand? An inelastic demand? What is the income elasticity? What conditions are needed for this to be a normal good ? Inferior?
First suppose the market demand for “cougar caps” is given by the equation: Q = a1 + a2 * P - a3 * P2 + a4*I where P is the price of cougar caps, I is income, Q is quantity of cougar caps and a1, a2, a3, a4 are positive constants. What is the price elasticity of demand? What conditions need to hold for this to be an elastic demand? An inelastic demand? What is the income elasticity? What conditions are needed for this to be a normal good ? Inferior?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
First suppose the market
Q = a1 + a2 * P - a3 * P2 + a4*I
where P is the
- What is the price elasticity of demand?
- What conditions need to hold for this to be an elastic demand? An inelastic demand?
- What is the income elasticity?
- What conditions are needed for this to be a normal good ? Inferior?
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