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Judy's Marshallian demand for oranges is I 0.7 /[2p o (p a +3) 0.4 ] where p a is the price of apples, p o
Judy's Marshallian demand for oranges is I0.7/[2po(pa+3)0.4] where pa is the price of apples, po is the price of oranges, and I is Judy's income. Suppose I = 100, pa = 2 and po = 1.
- Find and interpret the income elasticity for the demand for oranges. Are oranges an inferior or normal good?
- Find the own price elasticity of demand for oranges. Discuss how the price elasticity varies with po
- Find the cross price elasticity for oranges. Are oranges and apples gross substitutes or gross complements?
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