Question

You are analyzing the market for Good X. You know the following: PEDx = -1.3 IEDx...

You are analyzing the market for Good X. You know the following:

PEDx = -1.3

IEDx = 2.4

CPE(x,y) = 2

PESx = 1.4

a. If the price of Good Y increases, what do you expect to happen in the market for Good X? Describe any changes that may happen in a supply/demand graph and be sure to include how equilibrium price/quantity changes.

b. Does knowing the price elasticity of supply help you determine how much the supply curve will shift?

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