The demand for company X's product is given by Qx = 12 – 3Px + 4Py. Suppose good X sells for $3.00 per unit and good Y sells for RM1.50 per unit.Calculate the cross-price elasticity of demand between goods X and Y at the given prices.Are goods X and Y substitutes or complements?What is the own price elasticity of demand at these prices?How would your answers to parts i and iii change if the price of X dropped to RM2.50 per unit?

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Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter7: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 9CQ

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The demand for company X's product is given by Q_x = 12 – 3P_x + 4P_y. Suppose good X sells for $3.00 per unit and good Y sells for RM1.50 per unit.

Calculate the cross-price elasticity of demand between goods X and Y at the given prices.
Are goods X and Y substitutes or complements?
What is the own price elasticity of demand at these prices?
How would your answers to parts i and iii change if the price of X dropped to RM2.50 per unit?

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