Consider the Following Questions on Elasticity

question 135

Essay

Consider the following questions on elasticity:
a. If a 3% increase in income leads to a 1% increase in the quantity purchased, what is the income elasticity of demand? Is the good an inferior good?
b. The price of good Y decreases by 15% and the quantity sold of good X increases by 4%. What is the cross-price elasticity of demand for good X with respect to good Y? How are good X and good Y related?
c. The demand equation is Q^D = 15 - P. What is the price elasticity of demand at P = $6?

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