Question 3 Suppose the own-price elasticity of demand for a good X is −5, its income elasticity is −1, its advertising e

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Question 3 Suppose the own-price elasticity of demand for a good X is −5, its income elasticity is −1, its advertising e

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Question 3
Suppose the own-price elasticity of demand for a good X is −5,its income elasticity is −1, its advertising elasticity is 4, andthe cross-price elasticity of demand between it and good Y is 3.Determine how much the consumption of this goodwill change if: ·The price of good X decreases by 6%. · The price of good Yincreases by 7%. · Advertising decreases by 2%. · Income increasesby 3%.
Question 4 ·
A consumer is in equilibrium at point A in the accompanyingfigure. The price of good X is $5. · What is the price of good Y? ·What is the consumer’s income? · At point A, how many units of goodX does the consumer purchase? · Suppose the budget line changes sothat the consumer achieves a new equilibrium at point B. Whatchange in the economic environment led to this new equilibrium? Isthe consumer positively or negatively affected by the pricechange?
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