An analyst for a major apparel company estimates that the demand for its

raincoat is given by:

In Qdx = 10 - 1.2 In Px + 3 In R - 2 In Ay

Where R denotes the daily amount of rainfall and Ay represents the level of

advertising on good Y.

a. What would be the impact on demand of a percent increase in the daily

amount of rainfall?

b. What would be the impact of a 10 percent reduction in the amount of

advertising directed toward good Y? Can you think of a good that might be

good Y in this example?