1. The demand function for Good X is defined as Qx = 75 - 2Px - 1.5Py where Py is the price of Good Y. Calculate the price elasticity of demand using the point formula for Px = 20 and Py = 10. Determine whether demand is elastic, inelastic, or unit elastic with respect to its own price and whether Good Y is a substitute or a complement with respect to Good X.

Question

1. The demand function for Good X is defined as Qx = 75 - 2Px - 1.5Py where Py is the price of Good Y. Calculate the price elasticity of demand using the point formula for Px = 20 and Py = 10. Determine whether demand is elastic, inelastic, or unit elastic with respect to its own price and whether Good Y is a substitute or a complement with respect to Good X.

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Economics

Related Economics Q&A

Find answers to questions asked by students like you.

Q: Lou’s preferences over pizza (x) and other goods (y) are given by U(x, y) = 2xy2. His income is $200...

A: Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the que...

Q: The state might provide certain FDI incentives in order to generate technological spillover. Discuss...

A: STEP 1FDI (Foreign Direct Investment) is a funding (investment) in a business by an investor from fo...

Q: In Country Faraway, cigarettes are forbidden, so people trade cigarettes in a black market. The ciga...

A: We are given the demand and supply of cigarettes as follows:QD = 12 − PQS = 2P Demand: Demand of a g...

Q: By using consumer choice theory, explain why diamonds, which are not necessary to sustain life, are ...

A: Paradox of Value:The paradox of value refers to the condition where the price of an essential commod...

Q: Boeing estimates the own-price elasticity of demand for new commercial jets is –1.25.  Use their est...

A: Click to see the answer

Q: Use the table to answer the questions. In relation to taxes, Ramone will be filing as married filing...

A: Tax with marriage filling jointly can be calculated as follows.

Q: 1.Graph and label as either direct or indirect the relationships you would expect to find between (a...

A: (a.)The number of inches of rainfall per month and the sale of umbrellas:If inches of rainfall incre...

Q: Monika eats only steak and carrots for dinner. A serving of steak gives 250 calories and 10 units of...

A: It is given that,1 unit of serving steak = 250 calories + 10 Vitamins                    1 unit of s...

Q: 1)  The Framers envisioned a president who would? A) Be directly Responsible to the people  B) Be di...

A: If the framers (the persons who is responsible to generate a policy, system or a plan) are wished to...

Q: How to perform a cost benefit analysis?

A: There are some costs and benefits associated with each economic activity. Thus, a cost-benefit analy...

Q: Open market operations refer to A) the buying and selling of stocks in the stock market. B) the buyi...

A: The correct option is B.

Q: please help

A: Let\'s look at what information we have to work with. 

Q: Solow Growth Model    Why are these the right answers? See image.

A: From the questions, part a, this working is a short term phenomena and the increase in K will push t...

Q: Which of the following are true of an economy operating with a negative GDP gap? Check all that appl...

A: Gross Domestic Product (GDP at MP): This is the gross market value of all the final commodities gene...

Q: Chapter 9 Question Most cities are served by only one cable company. How might this monopoly power a...

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question s...

Q: if the governement would like to induce a consumer to consumer a specific level of some good. which ...

A: Figure 1 illustrates the impact of subsidy to consumer and the money value of the subsidy.

Q: The Fed argued that QE3 would work to reduce the unemployment rate. Use the federal funds market, th...

A: After the 2008 great recession, the US economy faced a credit crunch which has to be removed from th...

Q: the firm is regulated using the cost-plus, or fair-return price MR method and that regulators can ac...

A: Economic profit is the difference between the revenue received from the sale and the cost of the inp...

Q: Which lending agreement represents the highest real rate of return for a bank when it lends its mone...

A: Real rate of return is computed with the help of following formula:Real rate =   (1+Nominal rate) / ...

Q: Differential Pricing of Pharmaceuticals — The HIV/AIDS Crisis The HIV/AIDS crisis has been called th...

A: Answer 1:The monopoly over a patented pharmaceutical can be categorized as an improper term because ...

Q: 0 suppliers will satisfy domestic demand as much as possible before any exporting or importing takes...

A: World Price for soya beans is given, Pw= $545 per ton.The assumptions are that no one country can in...

Q: (Table: Calculating GDP) Using the information in the table Calculating GDP, which is the correct ca...

A: GDP (Gross Domestic Product) of a country is the final value of all goods and services produced/ sol...

Q: Does the fact that your bank keeps only a fraction of your account balance in reserve worry you? Why...

A: Step 1The bank is a financial institution that focuses on accepting the deposit and making progress ...

Q: **** I need help with question 4/5/6****   Nicholas Coffee roasts coffee the old-fashioned way (in g...

A: 4. Breakeven price can be calculated as follows:

Q: How does an increase in the money supply get into the hands of consumers? What do they do with it?

A: The total stock of currency and liquid form of instruments circulating in a nation at a particular p...

Q: What are the two major SOURCES of transaction costs?  (If these two things weren’t present, transact...

A: In economics, the transaction cost is the cost incurred while purchasing any commodity or service fr...

Q: Only question #1. Little stuck.

A: We have been given the variable - number of people living in a household (X) - and the corresponding...

Q: How can a government that isn't running a deficit still get itself into financial trouble?

A: When the government revenue is less than government expenditure it leads to deficit (Budget deficit)...

Q: We often work with production technologies that give rise to initially increasing marginal product o...

A: Production technology:True, because the slope of the production frontier is equal to the marginal pr...

Q: What are the challenges of the changing unemployment rate?

A: Unemployment: Unemployment is the situation under which the number of willing or able persons is mor...

Q: How do I solve number 5

A: Monopoly is a market structure where only a single seller exists. While perfect competition is a mar...

Q: The graph shows the aggregate demand (AD) curve and the long-run aggregate supply (LRAS) curve for a...

A: Increase in human capital:If Human capital of workers increase in an economy, then the long-run aggr...

Q: Match the terms with their corresponding descriptions firms' costs associated with changing their pr...

A: Macroeconomics:The study of economics as a whole is termed as macroeconomics for example study of na...

Q: A commercial bank will become illiquid if A) it has short-term liabilities that exceed its short-ter...

A: Click to see the answer

Q: Explain the role of brands in a monopolistic competition market. How can the pricing and profits for...

A: Monopolistically competitive market is one of the four market forms where there are large number of ...

Q: 12. (Table: Labor Force Data) Using the data from the table Labor Force Data, suppose the labor fo...

A: Let us first define some concepts related to labor force participation rate.Labor force: In an econo...

Q: 6.Which of the following are short-run and which are long-run adjustments? LO3 a.Wendy’s builds a ne...

A: Short run: Short run refers to a time period which does not allow a change in the capital to adjust ...

Q: A firm with pricing power (i.e. a price-maker) estimates that the elasticity of demand for its produ...

A: The relationship between Marginal Revenue and Elasticity of Demand is given byMR = P (1 + 1/A )where...

Q: How much is total surplus if the market is perfectly competitive?How much is total surplus if the ma...

A: Given thatMaximum price is $100 Minimum price is $20 Monopolist equilibrium price is $60 Monopolist ...

Q: Comment on the Fed's current monetary policy based on Powell's testimony.

A: The monetary policy is policy which is adopted by the monetary authority (central bank of the countr...

Q: If the Marginal Propensity to Consume (MPC) is .90, estimate the total (multiplied) effect of govern...

A: Marginal propensity to consume (MPC): The MPC is defined as the ratio of change in consumption due t...

Q: When the demand for money is greater than the supply of money:     A) people offering to s...

A: Money demand is the demand for cash balances by the individuals in the economy.Money supply is the t...

Q: The following two linear functions represent a market (thus one is a supply function, the other a de...

A: 1.) Market equilibrium price: Equate supply and demand function to get the value of market equilibri...

Q: Draw the supply and demand curves based on the following schedules.Price Quantity Demanded Quantity ...

A: 1.By following the aforementioned demand and supply schedules, it is crucial to determine the market...

Q: Draw the supply and demand curves based on the following market data  price .    quantiy demand.   ...

A: Meaning of Demand:Demand for the goods and services refers to the quantity which is the consumer is ...

Q: 22. A firm uses labor and capital, (L,K), to produce an output. The hourly cost of labor is $10, and...

A: The isocost line can be written as follows:

Q: Transmission and Amplification Mechanisms- Ask FRED ALFRED ty Percent of Value of Loans Secured by C...

A: a.Transmission and amplification mechanisms:From the given graph, the approximate average percent of...

Q: Suppose the price of A is $20 per unit, the price of B is $10 per unit, and theconsumer’s income is ...

A: Utility:The utility is the power or ability of the goods and services that satisfy the consumers wan...

Q: 3. Consider the following diagram: ATC MC ive AVC P-D-MR Quartity Would a perfectly competitive firm...

A: 3.In the perfect competitive market, the firm will produce the level of output at where the price eq...

Q: Please help!

A: 1.Total manufacturing time:Total manufacturing time can be calculated as follows: