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Given the demand tunction Q = 500 – 3P – 2P, + 0.01Y where P= 20, PA = 30 and Y = 5000, find (a) the price elasticity of demand (b) the cross-price elasticity of demand (c) the income elasticity of demand If income rises by 5%, calculate the corresponding percentage change in demand. Is the good inferior or superior?

Given the demand tunction Q = 500 – 3P – 2P, + 0.01Y where P= 20, PA = 30 and Y = 5000, find (a) the price elasticity of demand (b) the cross-price elasticity of demand (c) the income elasticity of demand If income rises by 5%, calculate the corresponding percentage change in demand. Is the good inferior or superior?

Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elasticity And Its Application
Section: Chapter Questions
Problem 1CQQ: A life-saving medicine without any close substitutes will tend to have a. a small elasticity of...
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1 Given the demand function Q = 500 – 3P – 2Pa+0.01Y where P = 20, PA = 30 and Y = 5000, find (a) the price elasticity of demand (b) the cross-price elasticity of demand (c) the income elasticity of demand If income rises by 5%, calculate the corresponding percentage change in demand. Is the good inferior or superior?
Transcribed Image Text:1 Given the demand function Q = 500 – 3P – 2Pa+0.01Y where P = 20, PA = 30 and Y = 5000, find (a) the price elasticity of demand (b) the cross-price elasticity of demand (c) the income elasticity of demand If income rises by 5%, calculate the corresponding percentage change in demand. Is the good inferior or superior?
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