Question: the estimated generalized demand functions for good X is given below, Qd = 500-5px + 3py + 0.25M + 1.8Ax - 0.1Ay where, px =

the estimated generalized demand functions for good X is given below,

Qd = 500-5px + 3py + 0.25M + 1.8Ax - 0.1Ay

where,

px = price of good x (RS. 5.00 per unit)

py = price of good y (RS. 2.50 per unit)

M = income (RS. 500 per day)

Ax = advertising expenditure on good x (RS. 2.00 per unit)

Ay = advertising expenditure on good y (RS. 10.00 per unit)

calculate and interpret the point price elasticity of demand.

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