Calculates the x point price elasticity of demand

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Reference no: EM13772538

IM’s utility function can be expressed as u(x, y) =?1/X + y and his monthly income is 10 DOLLAR. Given that price for X is P won and Y is 1 DOLLAR, please answer all the following questions as possible.

(1) Indicates the demand for X and Y as a function of P.

(2) Calculates the X point price elasticity of demand.

(3) When there are increases twice in the price of X and Y, and JIM’s income, consumption and preference of JIM never changed. This illustrates what?

Reference no: EM13772538

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