Answer to Question #28598 in Microeconomics for ivy gomez

Question

the elasticity of demand facing the shrimp sector is:
price elasticity of demand (PED).............................................-3.1
income elasticity of demand (YED)..........................................2.1
cross elasticity of demand (XED)............................................2.0
XED (% change in the demand for a good A)/ (% change in the price of good B)
PED (%change in demand)/(% change in price)
YED (% change in demand)/(% change in income)
the elasticity of lobster sector is:
price elasticity of demand (PED)....................-2.5
income elasticity of demand (YED).................2.1
cross- elasticity of demand (XED)...................3.7
1. which sector would lose the most from increase and why?( hint: use price elasticity of demand)
2.from the information given,decide whether shrimp is a normal or inferior good(for normal goods, demand falls when price rises. for inferior goods, demand falls when income increase)( hint: use in come elasticity of demand.