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Jill buys onlyr chocolate and wine. Her annual demand function for chocolate is: Q5 2 100 12pc 1'?va + EEw where Q: is the quantity
Jill buys onlyr chocolate and wine. Her annual demand function for chocolate is: Q5 2 100 12pc 1'?va + EEw where Q: is the quantity of chocolate demanded. pc is the price of a bar of chocolate. p\". is the price of a bottle of wine. and w is Jill's wealth. a. Is wine a substitute or complement for chocolate? [3 points] b. Is chocolate a normal or inferior good? [3 points] c. If p5 = 1, pm : 5 and. w = 42,UUU_._ compute the own-price elasticity of demand for chocolate and state whether it is elastic or inelastic. [6 points] (1. Using the same parameters. compute the cross-price elasticity of the demand for chocolate with respect to the price of wine. [4 points] e. Using the same parameters. compute the income elasticity of the demand for chocolate. [4 points]
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