Price elasticity of demand

Suppose demand is given by Q xd = 50 − 4Px + 6Py + Ax,

where Px = $4, Py = $2, and Ax = $50.

(a) What is the quantity demanded of good x? Please show your calculations.
(b) What is the own price elasticity of demand (point elasticity) when PX = $4? Is demand elastic

or inelastic at this price? Please explain.

(c) What is the cross price elasticity of demand between good X and good Y when PX = $4 (point

elasticity) ? Are goods X and Y substitutes or complements? Please explain.

Sample Solution

ACED ESSAYS