Suppose the demand function for a firm’s product is given by
LnQxd = 3- 0.5Ln Px- 2.5 Ln Py +Ln M +2Ln A Where Px= 10$ , Py= 4$, M = 20.000$ and A= 250$
a. Determine the price elasticity of demand, and state whether demand is elastic, inelastic or unit elastic? (4p)
b. Determine the cross price elasticity of demand between good X and good Y and state whether these two goods are substitutes or complements .(3p)
c. Determine the income elasticity of demand and state whether good X is inferior or normal goods? (3p)
Please let it be clear