Calculating cross price elasticity of demand.
The demand function for VCRs has been estimated to be Qv = 123 - 1.7Pt + 46 Pm - 2.1Pv -5M, where Qv is the quantity of VCRs,Pt is the price of a videocassette, pmis the price of a movie, Pv is the price of a VCR, and M is income. Based on this information, answer the following problems
Are VCRs normal or inferior goods?
Are movies substitutes or complements for VCRs?
Elucidate what additional information is needed to compute the price elasticity of demand for VCRs?