## Answer the following questions appropriately. Consider an economy in which there are only two goods, Good X and Good Y, which currently cost 50 and 20 respectively. Total consumer income

Answer the following questions appropriately. Consider an economy in which there are only two goods, Good X and Good Y, which

currently cost 50 and 20 respectively. Total consumer income is 1000, which is

currently used to purchase 10 units of Good X and 25 units of Good Y.

Suppose that the price of Good X falls to 40 and that consumption of Good X increases

to 12 units.

(i)

Calculate the price elasticity of demand for Good X.

[1]

(ii)

Calculate the cross-price elasticity of demand for Good Y with respect to the

price of Good X and comment on your answer.

[3]

[Total 4] The future lifetime of a new-born person is defined to be the random variable 7, which

is continuously distributed on the interval [0,], where 0< <co. Assuming ELT15

(Females) mortality, calculate the following probabilities.

(a) P(T > 40 |T > 25)

(b) P(40 <TS70|7 > 25)

[2]