1. **Problem Statement:** Calculate the own-price, cross-price, and income elasticities of demand for Martabak Power using the estimated demand function and mean values of variables. 2. **Estimated Demand Function:** $$Q_{mp} = 176.2709 - 106.6901 P_{mp} + 12.1556 P_{ms} + 4.5651 Y$$ where $Q_{mp}$ is consumption (thousand per week), $P_{mp}$ is price of Martabak Power, $P_{ms}$ is price of Martabak Special, and $Y$ is income per capita (in RM1000). 3. **Elasticity Formula:** Elasticity of $Q$ with respect to variable $X$ is $$E_X = \frac{\partial Q}{\partial X} \times \frac{X}{Q}$$ 4. **Calculate Elasticities at Mean Values:** Given means: $Q_{mp}=77.5$, $P_{mp}=1.35$, $P_{ms}=1.5$, $Y=14.075$ - Own-price elasticity: $$E_{P_{mp}} = (-106.6901) \times \frac{1.35}{77.5} = -1.858$$ - Cross-price elasticity: $$E_{P_{ms}} = 12.1556 \times \frac{1.5}{77.5} = 0.235$$ - Income elasticity: $$E_Y = 4.5651 \times \frac{14.075}{77.5} = 0.829$$ 5. **Interpretation:** - Own-price elasticity $|E_{P_{mp}}|=1.858 > 1$ means demand is elastic. - Cross-price elasticity positive means Martabak Special is a substitute. - Income elasticity positive means Martabak Power is a normal good. 6. **Effect of 10% Price Increase on Consumption:** $$\%\Delta Q = E_{P_{mp}} \times \%\Delta P = -1.858 \times 10\% = -18.58\%$$ Consumption decreases by 18.58%. 7. **Normal, Inferior, Superior, or Luxurious Good:** Income elasticity $0.829$ is positive and less than 1, so Martabak Power is a normal good but not luxurious. 8. **Effect of 4.5% Income Increase:** $$\%\Delta Q = 0.829 \times 4.5\% = 3.73\%$$ Consumption increases by 3.73%. 9. **Substitute or Complementary Good:** Cross-price elasticity $0.235 > 0$ means Martabak Special is a substitute. 10. **Effect of 7% Increase in Price of Martabak Special:** $$\%\Delta Q = 0.235 \times 7\% = 1.645\%$$ Consumption of Martabak Power increases by 1.645%. **Final answers:** - Own-price elasticity: $-1.858$ - Cross-price elasticity: $0.235$ - Income elasticity: $0.829$ - Demand is elastic. - Consumption decreases by 18.58% if price increases by 10%. - Martabak Power is a normal good. - It is not a luxurious good. - Consumption increases by 3.73% if income increases by 4.5%. - Martabak Special is a substitute. - Consumption increases by 1.645% if price of Martabak Special increases by 7%.