The demand for shoes is given as : * = 100 - 3P, + 4P, - .01M + 2A, where A, represents the amount of advertising spent on shoes (X), P, is the price of good
 X, P. is the price of good Y, and Mis average income. Suppose good X sells at $25 a pair, good Y sells at $35, the company utilizes 50 units of advertising, and average consumer income is $20,000. Calculate and interpret the own price, cross-price, and income elasticity of demand.Given that all the other factors will be constant, What price should be charged to maximize total revenue?

The daily demand for Adidas Running Shoes is estimated as follows:

Suppose Adidas sells for $25 a pair, Y sells for $35, the company utilizes 50 units of advertising and average consumer income is $20,000. Using this information, answer the following questions:

a) Calculate and interpret the own price, cross-price and income elasticities
b) For raising revenues, should this firm raise or lower the price? Why? Explain?
c) Is the good Y a substitute or complementary good? Why? Explain
d) Is Adidas a normal or an inferior good? Why? Explain

Suppose the own-price elasticity of demand for good X is -4, its income elasticity is 2, its advertising elasticity is 3, and the cross-price elasticity of demand between it and good Y is -3. Determine how much the consumption of this goodwill change if: a. The price of good X increases by 5 percent b. The price of good Y increases by 8 percent c. Advertising decreases by 4 percent d. Income falls by 3 percent