Question

In: Economics

The demand for good X is given by QXd =10000−2PX +10PY −5PZ +I where QXd is...

The demand for good X is given by

QXd =10000−2PX +10PY −5PZ +I

where QXd is the demand for good X, PX is the price of good X, PY is the price of good Y, PZ is the price of good Z, and I is income. PX = $1000, PY = $500, PZ =$1000,andI=$2000.

a. Indicate whether goods Y is substitutes or complements for good X.(5 points)

b. Indicate whether goods Z is substitutes or complements for good X. (5 points)

c. Is X an inferior or a normal good? (5 points)

d. Calculate the cross-price elasticity of demand for good X with respect to good Z. (5 points)

e. Calculate the income-elasticity of demand for good X. (5 points)

Solutions

Expert Solution

D.

E.


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