Suppose the demand function is Qxd = 100 − 5Px + 2Py - M. If Px = $4, Py = $2, and M = $50, what is the cross-price elasticity of good x with respect to the price of good y?

Solution Summary

This solution calculates the cross-price elasticity of a good with respect tot he given price of another.

... Use these prices of good X and the quantities demanded of good Y to calculate the cross-price elasticity of the demand of good Y when the price of good X ...

...Cross price elasticity = % change in quantity demanded of good X / % change in price of good Y -2 = 10 / % change in price of good Y % change in price of good...

... of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -6 ...

... Since the sign of cross-price elasticity is positive, we ... This is simply because the fact that elasticity is positive means that when the price of good...

... Use it to calculate the own-price arc elasticity of demand and the cross-price elasticity of demand. Determine whether Good Y is a complement or a substitute ...

... Q= Changes in quantity 0.0115 ?Y=Changes in ... 0.01) =1.15 Cross Elasticity: The cross-price elasticity of demand ... in quantity demanded of one good in response to ...

... of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 4, and the cross-price elasticity of demand between it and good Y is -6 ...

... Suppose now good X sells for $3.00 per unit and that good Y sells for $1.50 per unit. What is the cross-price elasticity of demand between goods X and Y at the ...

... of demand for good X is -2, its income elasticity is 3, its advertising elasticity is 4, and the cross -price elasticity of demand between it and good Y is -6 ...