Question 3 Suppose the demand function is given by Qxd=8Px0.5Py0.25M.pdf

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Question 3: Suppose the demand function is given by Qxd=8Px0.5Py0.25M0.12AX, where PX is the price of X,Py is the price of good Y,M is income, and AX is the amount of advertising on X. a) What is the own price elasticity of demand? b) What is the income elasticity of demand? c) What is the cross-price elasticity of demand between X and Y ? d) Is good X a normal or inferior good? Explain. (5 points).

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