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In: Economics

The estimated demand function for commodity X is described by the following equation: ^ Qd =...

The estimated demand function for commodity X is described by the following equation:
^
Qd = 50 – 2Px + 1.5 In - 0.75 Py
where Px = Price of commodity X
In = Consumer Income
Py = Price of commodity Y
(a)Does the behavior of the consumer of this product follow the law of demand? Explain
(b)Is commodity X a normal good or an inferior good? How did you know?
(c)Comment on the relationship between commodity X and commodity Y.
(d)Find price elasticity of demand, income elasticity of demand and cross price elasticity of demand given that the price of commodity X is $5 per unit, consumer’s income is $100 and commodity Y sells for $10 per unit.

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Expert Solution

Rahul Sunny answered 1 year ago
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