Q = 500 – 3P – 2P, +0.01Y where and P denote quantity and price of the good, Y is income, and price of an alternative good. is the a) If P-20, Pa- 30, and Y-5000, find (i) the price elasticity of demand (ii) the cross-price elasticity of demand (iii) the income elasticity of demand b) If income rises by 5%, calculate the corresponding percentage change in demane Is the good inferior or superior?

Q = 500 – 3P – 2P, +0.01Y where and P denote quantity and price of the good, Y is income, and price of an alternative good. is the a) If P-20, Pa- 30, and Y-5000, find (i) the price elasticity of demand (ii) the cross-price elasticity of demand (iii) the income elasticity of demand b) If income rises by 5%, calculate the corresponding percentage change in demane Is the good inferior or superior?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Given the demand function
Q = 500 – 3P – 2P, +0.01Y
P. is the
where and P denote quantity and price of the good, Y is income, and
price of an alternative good.
a) If P= 20, P4 = 30, and Y= 5000, find
(i) the price elasticity of demand
(ii) the cross-price elasticity of demand
(iii) the income elasticity of demand
b) If income rises by 5%, calculate the corresponding percentage change in demand.
Is the good inferior or superior?

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