This question focuses on the idea of cross price elasticity (often we use the example of peanut butter and jelly for complements) and the idea of complements and substitutes. We analyze data to see how the price of one product will affect the demand for another product.

If your company produced Windmills, and you are provided analysis such that the demand for Windmills is estimated to be

Q_a=Windmills= 800 - 0.7p_Windmills+ 12p_NaturalGas - 21p_S+ 0.12Y

Note that p_Windmills= 80, p_X=NaturalGAs= 50, p_S= 150, and Y= 20,000; answer the following: (18 Points)

You can either do this using calculus or an excel spreadsheetboth work. If you use calculus, show your work; if you use a spreadsheet, please submit the spreadsheet.

1. What is the price elasticity of demand for Windmills? This requires a calculation (5 Points)

1. What is the cross price elasticity with respect to Windmills and Good S? In this example, the price of Good S riseswhat happens to the quantity demanded for Windmills (5 Points). Give an example of why this may happen (this is a thought piece, it may not be accurate) and what is the meaning of the cross price elasticity in this case. Note that the product you produce are Windmills. This requires a calculation. (4 Points)

1. What is the income elasticity? This requires a calculation. (4 Points)