# Answer to Question #73568 in Microeconomics for Zulfiqar Ali

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
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2018-02-18T08:19:08-0500

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Assignment Expert
16.02.18, 15:57

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sanchit
16.02.18, 07:37

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?