1. Judy’s Marshallian demand for oranges is I^0.7/ 2po((pa +3)^0.4) , where pa is the price of apples, po is the price oforanges, and I is Judy’s income. Suppose I = 100, pa = 2, and po =1. (a) Find and interpret the income elasticity for the demand fororanges. Are oranges an inferior or normal good? (b) Find the ownprice elasticity of demand for oranges. Discuss how the priceelasticity varies with po.
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