1. The demand function for Good X is defined as Qx = 75 - 2Px - 1.5Py where Py is the price of Good Y. Calculate the price elasticity of demand using the point formula for Px = 20 and Py = 10. Determine whether demand is elastic, inelastic, or unit elastic with respect to its own price and whether Good Y is a substitute or a complement with respect to Good X.

2. How important is saving for a household and the economy? How much should be saved?

Answer rating: 100% (QA)

1 With the point formula Px 20 and Py 10 the demand for good X is calculated as follows Price elasticity of demand of good x is given by Therefore Fro... View the full answer