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Calculating own price and cross price elasticity values

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The demand function for kingston's product is given by
logQ = 2.01 -0.148LogP + 0.25Log Z

Q = the quantity demanded (in tons) of its product, P = the price ( in dollars per ton), and Z = the price(in dollars of a rival product

a. Calculate the price elastic of demand
b. Calculate the cross elasticity of demand between kingston's product and the rival product.

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Solution Preview

a. Calculate the price elastic of demand
logQ = 2.01 -0.148LogP + 0.25Log Z
Differentiating both sides with respect to P, we ...

Solution Summary

Solution describes the steps to calculate own price elasticity and cross price elasticity in the given case.

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Elasticity of demand

Using the "arc formula" and the data from the table below, compute where possible the own- price and income elasticities of demand. (remember that these elasticities are computed holding all other variables constant).

Price quantity price of related goods income
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$10 600 $30 $22,000
$12 500 $30 $22,000
$10 500 $20 $22,000

A. Compute owner price elasticity of demand?

B. Demand is -------- (elastic, inelastic, Unitary elastic)?

C. The cross price elasticity of demand= ------- ?

d. The related good is a------- ?

E. The income elasticity =------- /

F. The good is a ...... good?

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