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Demand for books is given by formula Q = 101' PC + Y, where P is book price and Pc stand for price of cookies. What is the income elasticity of

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Demand for books is given by formula Q = 101’ — PC + Y, where P is book price and Pc stand
for price of cookies. What is the income elasticity of demand at P=2, Pc=1, and Y=5? Is the
demand elastic or inelastic in income, is it inferior or nonnal? What is the cross-price elasticity at
P=2, Pc=1, and Y=15[}? Are books and cookies complements or substitutes? Explain.

Top Answer

( 1 ) Income elasticity of demand = 0.2083 Demand is... View the full answer

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