Heavily influenced by the price of another product

Assignment Help Business Economics

Reference no: EM131000032

Assume that the demand for a product X is heavily influenced by the price of another product Y (Py), and the income of consumers (I). The cross-price elasticity of X with respect to Y is exy = 1.25, and the income elasticity is eI = 2.

(1) Are X and Y complements or substitutes? Why?

(2) Is X a normal or inferior good?

(3) Suppose now Py decreases by 5%, and consumer income decreases by 1%. Will the quantity demanded of X increase or decrease? By what percent?

Reference no: EM131000032

Questions Cloud

How would classical theorists prevent crime : How would classical theorists prevent crime? What are some problems with the theory of the classical school? After your research, which theory do you tend to side with and why

Comparing multiple sample means - anova : Read the following CASE ANALYSIS - Pizza Delivered Quickly - Choose one of these mini-projects for your assignment each week. If you choose Option 1 you must continue to work on that option each week.

What is the effect of the change in methods : Ignoring income taxes, prepare the 2011 journal entry to adjust the accounts to reflect the average cost method.

Describe two strategies you might employ to prevent dmc : Describe at least two approaches that might decrease DMC in the criminal justice system and explain how. As a current or future criminal justice professional, describe two strategies you might employ to prevent DMC in the future, and explain why yo..

Heavily influenced by the price of another product : Assume that the demand for a product X is heavily influenced by the price of another product Y (Py), and the income of consumers (I). The cross-price elasticity of X with respect to Y is exy = 1.25, and the income elasticity is eI = 2. Are X and Y co..

What is the new equilibrium price and quantity of avocados : Consider again the avocado example in the textbook, where demand and supply functions are Qd = 160 – 40p Qs = 50 + 15p Suppose a severe drought hit California, and the state government decided to subsidize farmers 40 cents for each pound of avocados ..

Explained variable in regression analysis : The variation attributable to factors other than the relationship between the independent variables and the explained variable in a regression analysis is represented by Question 19 options: regression sum of squares. total sum of squares. error sum ..

Which of the two parties involved breached the contract : Which of the two parties involved breached the contract? Was the loan's prepayment charge reasonable, and should it have been enforced? Why or Why not

Explaining your actions and justifying them : Write an open letter (to be published in the Wall Street Journal) both explaining your actions and justifying them. Your purpose is to persuade your readers that your decision was correct, inevitable, and unavoidable.

User Account

All Pages