Q. Assume that PY increases by 15%, what percentage effect on quantity demanded of product X could be expected?
Compute the income elasticity of demand for product X when I= $13,000. How could we categorize product X? Explain that do you consider commodity X a cyclical or non cyclical good? Explicate why.
Do you consider product X a luxury good or necessity? Explicate why.
Suppose the economy is in a recession and per capita disposable income is expected to decrease by 5%, then what percentage effect on sales would you expect to take place?