question archive What can you determine about consumer demand for a product whose estimated demand elasticities are as follows: Price Elasticity of demand -0
What can you determine about consumer demand for a product whose estimated demand elasticities are as follows: Price Elasticity of demand -0
Subject:EconomicsPrice:2.88 Bought3
What can you determine about consumer demand for a product whose estimated demand elasticities are as follows:
| Price Elasticity of demand | -0.85 |
| Income Elasticity of demand | 2.5 |
| Cross Price Elasticity of demand with this product and your product | -2 2. |
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The price elasticity of demand for this product in absolute terms is equal to 0.85. We can say that the demand for this product is inelastic since the price elasticity of demand is less than 1.
The income elasticity of demand for the product is 2.5. We can conclude that this product is a normal good since it has a positive income elasticity of demand. Also, the good is a luxury good since the income elasticity of demand is greater than 1.
The cross-price elasticity of demand between this product and my product is -2.2. We can say that my product is a complement to the product described above since the cross-price elasticity of demand is negative.
