Suppose that the demand curve for commodity X is X = 25 px¹/2 py¹/3 (3/4 where px = price of x, py = price of y, and I = Consumer's income. (i) Find the own price elasticity of demand for X, the cross-price elasticity of demand for X with respect to the price of Y, and the income elasticity of demand for X. (ii) 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. (iii) Estimate the demand for good X when px = 100, py=125, and I = 10,000
Suppose that the demand curve for commodity X is X = 25 px¹/2 py¹/3 (3/4 where px = price of x, py = price of y, and I = Consumer's income. (i) Find the own price elasticity of demand for X, the cross-price elasticity of demand for X with respect to the price of Y, and the income elasticity of demand for X. (ii) 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. (iii) Estimate the demand for good X when px = 100, py=125, and I = 10,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please Show Each and Every Working VERY CLEARLY. There are NO multi-questions here, only just multi-PART questions which are CONNECTED to each other, and hence, Please do NOT Leave any, Thank You!
Elasticity
Transcribed Image Text:Suppose that the demand curve for commodity X is
X = 25 px1/2 py1/3 13/4
where px = price of x, py = price of y, and I = Consumer's income.
(i) Find the own price elasticity of demand for X , the cross-price elasticity of
demand for X with respect to the price of Y, and the income elasticity of
demand for X.
(ii) 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.
(iii) Estimate the demand for good X when px = 100, py = 125, and I = 10,000
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