1 suppose that ed 0667 and efd 075 for given country a

Question

1.) Suppose that ε_D = 0.667 and ε^F_D = 0.75 for given country:

a) Are import demands elastic or inelastic in this case?

b) Does the Marshall-Lerner condition hold? How do you know?

c) Suppose that domestic price of this country's imports rise by 10% following a devaluation. What will happen to the quantity that it imports?