Provide a detail answer to the following question:

1. Suppose you have the following hypothetical demand or sales function.

Q_X= 600- 6P_X+ 20I +0.4P_Y

and

P_X= $80, (price of good X)

P_Y=$1,300, (price of good Y)

I = $30 (disposable per capita income)

a.write a narrative interpretation for the coefficient of PY

b. Given that P_X= $80, ceteris paribus, calculate the price elasticity of demand andhow could we classify demand?

c.Suppose P_Xincreases by 10%, by what percentage would sales decrease?Explain how this price increase affect total revenues from good X.

d.Given that P_Y= $1.300, ceteris paribus, calculate the cross price elasticity ofdemand for product X with respect to the price of product Y.

eGiven your answer ind, how could we classify product X and product Y?Suppose that P_Yincreases by 15%, what percentage effect on quantity demandedof product X could be expected?

f. Calculate the income elasticity of demand for product X when I= $30. How couldwe classify product X? Is product X a cyclical or non cyclical good? Is product Xa luxury good or necessity? Explain why. Suppose the economy is in a recessionand per capita disposable income is expected to decrease by 5%. Whatpercentage effect on sales would you expect to take place?

gAssuming all else equal, at what price would demand be unit elastic, 1.