A3.2 The weekly demand for sandwiches at a local sandwich shop is given by Qd = 2,000 - 5P + 2Pj - 0.01INCOME where Qd is the number of sandwiches demanded per week, P is the price of a sandwich, Pj is the price of a related product, and INCOME is the average monthly income of consumers.

a. Suppose that P = $25, Pj = $50, and INCOME = $5,000. What is the value of the cross-price elasticity of demand? Is the related product a substitute or a complement?

b. Suppose that P = $10, Pj = $50, and INCOME = $5,000. What is the value of the income elasticity of demand? Are sandwiches a normal good or an inferior good?