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suppose the demand for good x is given by Qdx = 10 + axpx + aypy + aMM. if ay is positive, then:

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Darryn D'Souza
Darryn D'SouzaLv10
5 Nov 2020

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Related questions

The extended demand function of good Y is:

QdY = 1400-20PX - 10Py+ 0.1M

where: QdY= quantity demanded of good Y

PY = Price of good Y

M = Average consumer income

Px = Price of related good X (related in consumption to good Y)

a)

If M=10,000, Py=50, and Px=50then Qdx=____

If M=20,000, Py=50, and Px=60then Qdx=_____

c) Use these two prices and quantities demanded to calculate the value of the price elasticity of demand between these two points on the demand curve for good Y (use the arc elasticity formula). Show your work and interpret your answer. What will happen to revenues for the suppliers of good Y as the price of good Y decreases from Px=50 to Px=60? WHY?

Assume that the demand for product X is represented by the following equation: QDX = 1000 - 10PX -  5PY + 2PZ Which of the products Y and Z is a substitute to X in consumption?

5. The demand curve for a product is given by Qdx = 1,000 - 2Px + .02Pz where Pz = $400. (Hint: If you're not comfortable with the calculus alternatives, compute Q at the given prices, then again with a 1% increase in price. Then figure percentage change in Q over the percentage change in P, %Q/%P).

a. What is the own-price elasticity of demand when Px = $154? Is the demand elastic or inelastic? What would happen to the firm's revenue if it decided to charge a price below $154?

b. What is the own-price elasticity of demand when Px = $354? Is the demand elastic or inelastic? What would happen to the firm's revenue if it decided to charge a price below $354?

c. What is the cross-price elasticity of demand between good X and good Z when Px = $154? Are good X and good Z substitutes are complements?

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