The extended demand function of good X is:

QDX = 1200 - 10 PX + 20 PY + 0.25 M where:

QDX = quantity demanded of good X

PX = Price of good X

PY = Price of related good Y (related in consumption to good X)

M = Average consumer income .

Fix the following variables:

M = 20,000

PY = 10,

Assume:

PX changes from $400 to $420

What is the value of the price elasticity of demand [Use the arc elasticity formula.]

	a.	-1.537
	b.	-1.78
	c.	-1.375
	d.	-1.872