Answer Happy

(a) Consider the following information for a product X and a related product Y: Quantity of X traded Price of X Income of Consumers Price of Y 12,000 $1.00 $10,000 $1.00 16,000 $0.80 $9,000 $1.20 (i) Determine the price elasticity of demand for X, income elasticity of demand for X and the cross price elasticity of demand between X and Y using the mid-point formula. Based on the elasticities, classify X in terms of its price and income elasticities of demand and establish the relationship between product X and product Y. (6 marks) (ii) Given that price of product X increases by 4%, consumers' income increases by 2% and price of product Y increases by 3%, compute the effect on the revenue from product X, assume each of change occurs separately. (4 marks)