Determine what happens to chocolate consumption

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Jen likes only chocolate and economics textbooks. Her demand functions for chocolate and textbooks are
given by
Qc =m / (pc + pt)
Qt =m /(pc + pt)
where m denotes her income and pc and pt the price of chocolate and textbooks respectively.

a. Are chocolate and textbooks complements or substitutes for Jen?

b. Calculate the income elasticity for chocolate. Is chocolate a normal good?

c. Assume we observe the following: Qt = 5; pc = 2; pt = 2. If the price of textbooks doubles, by how much does the income have to increase to keep the textbook consumption constant? What happens to chocolate consumption? Explain.

Reference no: EM13207642

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