Answer to Question #128780 in Microeconomics for Sherlina Devathanappar

Question

Suppose demand for good A is given by QdA = 500 – 10PA + 2PB + 0.70I where PA is the price of good A, PB is the price of some other good B, and I is income. Assume that PA is currently $10, PB is currently $5, and I is currently $100.
a. What is the elasticity of demand for good A with respect to the price of good A at the current situation?
b. What is the cross-price elasticity of the demand for good A with respect to the price of good B at the current situation?
c. What is the income elasticity of demand for good A at the current situation?

Answer 1

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