PLEASE ANSWER!! NEED HELP QUICK!!! The given is natural logarithmic function. Ln

Question

PLEASE ANSWER!! NEED HELP QUICK!!!

The given is natural logarithmic function. Ln(Q)=-0.23-0.34ln(P)+0.45ln(P2)+1.33ln(I)

Hint: Ln y= x ln a

(d/dx)ln y=(d/dx)x ln a= ln a (d/dx)x = ln a(1)= ln a

Where: P is price of raspberries P2 is price of blackberry I is income Q is quantity

a. What is the price elasticity of demand for raspberries?

b. What is income elasticity of demand?

c. What is cross-price elasticity of demand?

d. Is demand elastic for each good (raspberries, blackberry, and income)? Why? Please, explain.

Explanation / Answer

a) Ed = (dQ/dP) * (P/Q)
Price elasticity of demand for rasberries is - 0.34 as it is a log-log model. So,the coefficient is the elasticity.
Also, elasticity cannot be negative so 0.34 is the required elasticity. As 0.34<1 it is inelastic demand.

b) Income elasticity of demand is the coefficient of I = 1.33
c) Cross-price elasticity of demand 0.45
In cross price we take the coeficient of other fruit .
d) Rasberries = Inelastic Demand as 0.34<1
Blackberry = Inelastic Demand as 0.45<1
Income = Elastic Demand beacuse 1.33>1

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