(ii) Suppose that the demand function for commodity X is given by X = 35 px1/2 p¹/315/4 where p. = price of x, py= price of y, and I = income. (a) By taking logarithms or otherwise find the PEDx, CPEDxy and IED. (b) Determine whether demand for X is elastic or inelastic, whether X and Y are substitutes or compliments and whether X is a normal, an inferior or a luxury good.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Price Elasticity

(ii) Suppose that the demand function for commodity X is given by
X = 35 p,/2 p,/3 [5/4
where p, = price of x, py price of y, and I = income.
(a) By taking logarithms or otherwise find the PEDX, CPEDAY and IED.
(b) Determine whether demand for X is elastic or inelastic, whether X and
Y are substitutes or compliments and whether X is a normal, an inferior
or a luxury good.
Transcribed Image Text:(ii) Suppose that the demand function for commodity X is given by X = 35 p,/2 p,/3 [5/4 where p, = price of x, py price of y, and I = income. (a) By taking logarithms or otherwise find the PEDX, CPEDAY and IED. (b) Determine whether demand for X is elastic or inelastic, whether X and Y are substitutes or compliments and whether X is a normal, an inferior or a luxury good.
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