PROBLEM (4) The demand for private jets (x) is given by QD= 20 - P+Py where px is the price of jets, py is the price of yachts and I is the average income level. (a) Is a jet a normal or inferior good? Are yachts and jets substitutes or complements ?(explain your reasoning in a sentence) At the point I = px = py=10 calculate (b) the (own) price elasticity of demand (c) the cross price elasticity of demand (demand for jets with respect to the price of yachts) (d) the income elasticity of demand (Calculus help: the derivative ofis - ) X

PROBLEM (4) The demand for private jets (x) is given by QD= 20 - P+Py where px is the price of jets, py is the price of yachts and I is the average income level. (a) Is a jet a normal or inferior good? Are yachts and jets substitutes or complements ?(explain your reasoning in a sentence) At the point I = px = py=10 calculate (b) the (own) price elasticity of demand (c) the cross price elasticity of demand (demand for jets with respect to the price of yachts) (d) the income elasticity of demand (Calculus help: the derivative ofis - ) X

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.

Question

PROBLEM (4) The demand for private jets (x) is given by QD= 20 -
- P/² + Py
where px is the price of jets, py is the price of yachts and I is the average income level.
(a) Is a jet a normal or inferior good? Are yachts and jets substitutes or complements ?(explain your reasoning in a
sentence)
At the point I = px = py=10 calculate
(b) the (own) price elasticity of demand
(c) the cross price elasticity of demand (demand for jets with respect to the price of yachts)
(d) the income elasticity of demand (Calculus help: the derivative of - is
X
X

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