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# Own price elasticity of demand

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The demand for company X's product is given by Qx=12-3Px+4Py . Suppose good X sells for \$3.00 per unit and good Y sells for \$1.50 per unit.

a.Calculate the cross-price elasticity of demand between goods X and Y at the given prices.
b.Are goods X and Y substitutes or complements?
c.What is the own price elasticity of demand at these prices?
d.How would your answers to parts a and c change if the price of X dropped to \$2.50 per unit?

https://brainmass.com/economics/demand-supply/own-price-elasticity-of-demand-304277

#### Solution Preview

a.Calculate the cross-price elasticity of demand between goods X and Y at the given prices.
Qx=12-3Px+4Py
Put Px=3 and Py=1.50
Let us calculate Qx at these values.
Qx=12-3Px+4Py
=12-3*3+4*1.50
=9
Qx=12-3Px+4Py
dQx/dPy=4

Cross ...

#### Solution Summary

Own price elasticity of demand is solved.

\$2.19