The demand function good X is ln Qdx = a + b ln Px + c ln
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a. If M = 45,000 and Px = 5.69, compute the own price elasticity of demand based on these estimates. Determine whether demand is elastic or inelastic.
b. If M = 45,000 and Px = 5.69, compute the income elasticity of demand based on these estimates. Determine whether X is a normal or inferior good.
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Related Book For
Managerial Economics and Business Strategy
ISBN: 978-0071267441
7th Edition
Authors: Michael R. baye
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