Purchase Solution

Price, Income and Cross Price Elasticities

Not what you're looking for?

Ask Custom Question

The market demand for cotton socks is given by:
Q=1,000+.5I-400P+200P'

where,
Q = Annual demand in number of pairs
I = Average income in dollars per year
P = Price of one pair of cotton socks
P' = Price of one pair of wool socks

Given that I = $20,000, P=$10, and P'=$5, determine:

A. The price elasticity, e(Q,P)
B. The income elasticity, e(Q,I)
C. The cross price elasticity, e(Q,P')

Purchase this Solution

Solution Summary

This solution looks at economic elasticities (price, income, cross price).

Purchase this Solution


Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.