Using the homogeneity condition and given a PED of -.28 with a YED of -1.28: What is the XED? A. -0.56 B. +0.56 C. -1.56   D. +1.56

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
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Chapter9: Production Functions
Section: Chapter Questions
Problem 9.6P
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Using the homogeneity condition and given a PED of -.28 with a YED of -1.28: What is the XED?

A. -0.56

B. +0.56

C. -1.56
 
D. +1.56
Expert Solution
Step 1

The homogeneity condition implies that the sum of own price elasticity, income elasticity, and cross price elasticity is equal to one.  

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