Answered: Consider the following demand function…

Consider the following demand function for good X: X = 200 – 4P, + P 3M P, is the price of good X, P, is the price of good Y, and M is income. Currently, P, = $2, P, = $4, and M = $100.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter3: Supply And Demand: Theory

Section: Chapter Questions

Problem 19QP

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Question

Hello, I need help solving this practice problem. I already figured out part A and B but I am not getting C correct.

Consider the following demand function for good X:
X = 200 – 4P, +P? + 3M
P, is the price of good X, P, is the price of good Y, and M is income. Currently, P, = $2, P, = $4,
and M = $100.

С. I.
II.
Compute the income elasticity for good X. Show your work.
Is good X normal or inferior?

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