Question: Question 2 (20) The demand for good X is given by the following equation: Qx=290-4Px+2.5Py+51 where Px and Py represent the prices of goods X,

Question 2 (20) The demand for good X is given by the following equation: Qx=290-4Px+2.5Py+51 where Px and Py represent the prices of goods X, Y and I, income per capita. Currently Px= 60, FY = $20, and I = 40. (a) Calculate the elasticity of demand for good X with respect to its own price, the price of Y, and income. (6) (b) Interpret (explain) what each of the three elasticity measures calculated in (a) above mean. (3) (c) Calculate the revenue-maximizing price and quantity for good X. (2) (d) If the cost per unit of good X is 35 and the company behaves as a monopolist, how many units of X will be sold and at what price? (5) (e) What happens to the price elasticity of demand for X if the price of Y increases to $28. (4)

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