Compute predicted quantity demanded of x at these prices

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Reference no: EM13150093

The empirical demand function of product X is estimated as: x = 745.0 – 8.5P - 0.025M + 5.6PR Where, x is the predicted quantity demanded of X, P is the price of X, M is the average consumer income, and is the price of a related product R. a. Assume that the price of X is $1.65, the average consumer income is $20,000, and the price of the related good is $1.75. Compute the predicted quantity demanded of X at these prices and income. b. At the values of P, M, PR given above, what are the price, income, and cross price elasticities of demand?

Reference no: EM13150093

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