the demand curve for a product is given by qxd = 1,200 - 3px - 0.1pz where pz = $300.
a. What is the own-price elasticity of demand when Px = $140? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price below $140?
Own price elasticity:
If the firm prices below $140, revenue will: (increase, decrease or not change)
b. What is the own-price elasticity of demand when Px = $240? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price above $240?
Own price elasticity:
If the firm prices above $240, revenue will:
c. What is the cross-price elasticity of demand between good X and good Z when Px = $140? Are goods X and Z substitutes or complements?
Cross-price elasticity:
the demand curve for a product is given by qxd = 1,200 - 3px - 0.1pz where pz = $300.
a. What is the own-price elasticity of demand when Px = $140? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price below $140?
Own price elasticity:
If the firm prices below $140, revenue will: (increase, decrease or not change)
b. What is the own-price elasticity of demand when Px = $240? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price above $240?
Own price elasticity:
If the firm prices above $240, revenue will:
c. What is the cross-price elasticity of demand between good X and good Z when Px = $140? Are goods X and Z substitutes or complements?
Cross-price elasticity:
