Ap economic

(f) The income elasticity of demand for Good X is 2.5, and the cross-price elasticity of demand for shoes with respect to the price of Good X is - 0.4 . Based on your answer to part (e), what will happen to the demand for shoes? Explain. (g) Now assume that the market in which Dave's General Store operates is in long-run equilibrium. (i) Suppose the rent paid by Dave's General Store decreases. Will Dave's General Store's profit-maximizing quantity of Good X increase, decrease, or stay the same in the short run? Explain. (ii) Instead suppose Dave's General Store hires labor in a perfectly competitive market and the market wage increases. Will Dave's General Store's profit-maximizing quantity of Good X increase, decrease, or stay the same in the short run? Explain