Consider the demand function for good1, Q1 = 2795 - 4P1 + 0.5P2 - 0.25P3 + 0.08Y Where, price of good1 (P1) is 52, price of good2 (P2) is 186, price of good3 (P3) is 176, and income ( Y ) is 22368; (a) Find the price elasticity of demand (PED). (b) Find the income elasticity of demand (YED). (c) Find the cross price elasticity of demand (XED) between good1 and good3. (d) estimate the percentage change in the demand for good1 resulting from a 12% decrease in the price of good2
Consider the demand function for good1, Q1 = 2795 - 4P1 + 0.5P2 - 0.25P3 + 0.08Y Where, price of good1 (P1) is 52, price of good2 (P2) is 186, price of good3 (P3) is 176, and income ( Y ) is 22368; (a) Find the price elasticity of demand (PED). (b) Find the income elasticity of demand (YED). (c) Find the cross price elasticity of demand (XED) between good1 and good3. (d) estimate the percentage change in the demand for good1 resulting from a 12% decrease in the price of good2
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...
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