We assume that there are two goods that compete with each other, whose demand and 2 depend on their own price as well as on the price of the other good: For this situation, different price elasticities can be formulated, the so-called own-price elasticities of demand Exipi (P1, P2) = as well as the cross-price Ex,P2 (P1, P2) x1 = x1(P1, P2) x2 = x2(P1, P2). xi (p, p2) Pi X1 elasticities of demand ri(p1, p2) P2 X1 and and Ex2,P2 (P1, P) Ex2.P1 (P1, P2) x2(p1, p2) P2 X2 x2(p1, p2) P1 pi X2 (a) For the demand functions -3/2 1/2 21 = 8P P2 x2 = 3p P2 determine the respective own-price elasticities and the two cross-price elasticities. and 1/2-1/2 determine the respective own-price elasticities and the two cross-pric (b) How do the demands 1 and 2 change (approximately) if i. the price p increases by 1%? ii. the price p2 decreases by 2%?