Question: The demand curve for a product is given by Q x = 1,000 2Px + .02Pz, where Pz = $400. a. What is the

The demand curve for a product is given by Q x = 1,000 – 2Px + .02Pz, where Pz = $400.
a. What is the own price elasticity of demand when Px = $154? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below $154?
b. What is the own price elasticity of demand when Px = $354? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price above $354?
c. What is the cross-price elasticity of demand between good X and good Z when Px = $154? Are goods X and Z substitutes or complements?

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a At the given prices quantity demanded is 700 units Q d x 1000 2 154 02 400 700 ... View full answer

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