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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?

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    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