# Own price elasticity of demand

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