Question #73568

The demand equation is estimated to be 50 – 3P + 2Po , where Po is the price of some other good. Assune 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 the equation is correctly estimated, is the good inferiod, 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 the equation is correctly estimated, is the good inferiod, a necessity, or a luxury? Explain

Expert's answer

Learn more about our help with Assignments: Microeconomics

## Comments

Assignment Expert16.02.18, 15:57Dear visitor, please use panel for submitting new questions

sanchit16.02.18, 07:37The demand equation is estimated to be 50 – 3P + 2Po , where Po is the price of some other good. Assune 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?

## Leave a comment