# The demand curve for a product is given by QDx = 1,200 – 3Px – 0.1Pz, where Pz=\$300.a) What is the own price elasticity of demand when Px = \$140? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below \$140?b) What is the own price elasticity of demand when Px = \$240? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price above \$240?c) Are goods X and Z substitutes or complements? What is the cross-price elasticity of demand between goods X and Z when Px = \$140?

Question
693 views

The demand curve for a product is given by QDx = 1,200 – 3Px – 0.1Pz, where Pz=\$300.

1. a) What is the own price elasticity of demand when Px = \$140? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price below \$140?
2. b) What is the own price elasticity of demand when Px = \$240? Is demand elastic or inelastic at this price? What would happen to the firm’s revenue if it decided to charge a price above \$240?
3. c) Are goods X and Z substitutes or complements? What is the cross-price elasticity of demand between goods X and Z when Px = \$140?
check_circle

Step 1

Own price elasticity of demand is the measure of change in the quantity demanded of a product due to the change in its price.

Formula of price elasticity of demand, ep:

Step 2

The equation of demand is given to be: QDx = 1,200 – 3Px – 0.1Pz

Now, putting the value of Pz in equation,

Step 3

### Want to see the full answer?

See Solution

#### Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in