Homework answers / question archive / Suppose the demand function for a firm?s product is given by ln QXd = 7 - 1

Suppose the demand function for a firm?s product is given by ln QXd = 7 - 1

Economics

Share With

Suppose the demand function for a firm?s product is given by ln QXd = 7 - 1.5 ln PX + 2 ln PY - 0.5 ln M + ln A where: Px = $15 Py = $6 M = $40,000, and A = $350

a. Determine the own price elasticity of demand, and state whether demand is elastic, inelastic, or unitary elastic. Own price elasticity: Demand is: inelastic, unitary elastic, elastic

b. Determine the cross-price elasticity of demand between good X and good Y, and state whether these two goods are substitutes or complements. Cross-price elasticity: These two goods are: substitutes, complements

c. Determine the income elasticity of demand, and state whether good X is a normal or inferior good. Income elasticity: Good X is: inferior, normal

d. Determine the own advertising elasticity of demand.