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emand when P = $25 and Y = $500. b) Income elasticity of demand when P = $25 and Y = $500. C) Interpret the resul

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

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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Question

The demand equation for a good is given by the equation: Q = 700 – 2P + 0.02Y (Where P is the price and Y is the income). Determine the following: a) Price elasticity of demand when P = $25 and Y = $500. b) Income elasticity of demand when P = $25 and Y = $500. C) Interpret the results obtained in (a) & (b) above. Answer a, b and c

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