Question: The market demand function for the company is given by the following equation QQpx = 84 3.1 Ppx +0.81 +0.9 Ppz where QA px is

The market demand function for the company is given by the

The market demand function for the company is given by the following equation QQpx = 84 3.1 Ppx +0.81 +0.9 Ppz where QA px is the number of drug X per year in thousands, Ppx is the average price of drug X (in thousands of USD), I is the household monthly income (in thousands of USD), and Ppz is the average price of another substitute drug Z (in thousands of USD). Assume that Ppx is equal to 38, 1 is equal to 100, and Ppz is equal to 18. Calculate the price elasticity of demand and interpret the result. (notice that AQ/AP = -3.1)

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