The income elasticity of demand
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Determine income elasticity of demand.
$2.19
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Income Elasticity of Demand and Cross Elasticity of Demand
Demand function for product: Qd = 500 - 2P + 3Pr + 0.1N, where P is price, Pr is price of related good, and N is per capita disposable income. Assume P = $10, Pr = $20, and N = $6,000.
A. Income elasticity of demand at N = $6,000? (Show Work)
B. Cross elasticity of demand given Pr = $20? (Show Work)
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