The market demand for cotton socks is given by:
Q=1,000+.5I-400P+200P'
where,
Q = Annual demand in number of pairs
I = Average income in dollars per year
P = Price of one pair of cotton socks
P' = Price of one pair of wool socks
Given that I = $20,000, P=$10, and P'=$5, determine:
A. The price elasticity, e(Q,P)
B. The income elasticity, e(Q,I)
C. The cross price elasticity, e(Q,P')