2. Suppose a demandfor a product X has been estimated to the have the following demand function:

Q_x = 1.5 -3.0P_X+ 0.8 I + 2.0 P_Y - 0.6 P_s+ 1.2 A

where x, y, and s are related products, I is the level of income and A is advertising. Suppose that in a given year, the values of each item are as follows: P_X = 2, I = 2.5, P_Y= 1.80, P_S= 0.50, A = 1.

a. Find Q_X for this particular year.

b. Find the own-price elasticity of demand for product X. Is demand for X elastic or inelastic?

c. Find the cross-price elasticity with respect to product Y. Are X and Y complements or substitutes?

d. Find the cross-price elasticity with respect to product S. Are X and S complements or substitutes?

e. Find the elasticity of demand of Q_Xwith respect to advertising.