Question #39574

the demand equation is estimated to be 50-3P-2Po, where Po is the price of other good. Assume the average value of P is $3 and the average value of Po is $6.

a. what is the price elasticity at the average values of P and Po? how should the price of the good be changed to increase total revenues?

b. what is the cross elasticity at the average values of P and Po? what is the relationship between the two goods?

c. if equation is correctly estimated is good inferior, a necessity or a luxury? Explain.

a. what is the price elasticity at the average values of P and Po? how should the price of the good be changed to increase total revenues?

b. what is the cross elasticity at the average values of P and Po? what is the relationship between the two goods?

c. if equation is correctly estimated is good inferior, a necessity or a luxury? Explain.

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