Determine the own advertising elasticity of demand

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Reference no: EM13236276

Suppose the demand function for a firm's product is given by
ln Q_x^d = 3 - 0.5 ln Px - 2.5 ln Py + ln M + 2 ln A

where
Px = $10, Py = $4, M = 20,000 and, A = $250.

a. Determine the own price elasticity of demand, and state whether demand is elastic, inelastic, or unitary elastic.

b.Determine the cross-price elasticity of demand between good X and good Y, and state whether these two goods are substitutes or complements.

c.Determine the outcome elasticity of demand, and state whether good X is a normal or inferior good.

d.Determine the own advertising elasticity of demand.

Reference no: EM13236276

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