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The demand functions for two commodities, A and B, are given by QA = AP?0.5Y0.5 and...

The demand functions for two commodities, A and B, are given by QA = AP?0.5Y0.5 and QB = BP?1.5Y1.5 (a) Find the price elasticity of demand for each good and hence comment on the rela- tive sensitivity of demand due to changes in price. (b) Find the income elasticity of demand for each good. Which good is normal and which is superior? Give a reason for your answer.

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Rahul Sunny answered 2 years ago
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