Question: Assume the same extended demand function of good X as in the previous questions: QDX = 1400 20 PX - 10 PY + 0.1 M

Assume the same extended demand function of good X as in the previous questions:

QDX = 1400 20 PX - 10 PY + 0.1 M

Assume that

PX = 50

M =10,000

PY starts at 50 and then increases to 80. What is the cross-price elasticity of the demand of good X when the price of good Y increases from 50 to 80.

	a.	-0.69
	b.	0.69
	c.	0.87
	d.	-0.87

Based on your answer to the previous question, goods X and Y are:

	a.	inelastic
	b.	complements
	c.	inferior
	d.	substitutes

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