The demand curve for a product is given by QXd = 1,200 - 3Px - 0

a.

Step one: determine quantity demanded (QXd):

• QXd = 1,200 - 3Px - 0.1Pz

We know that:

• Px = $140
• Pz = $300

Therefore:

• QXd = 1,200 - 3(140) - 0.1(300)
• QXd = $750

Step two: find price elasticity of demand:

• PED = (Change in Quantity /Change in Price) * (Price / Quantity)

By using the demand equation (QXd = 1,200 - 3Px - 0.1Pz), we can find that the Change in Quantity / Change in Price = -3. We know that:

• price (Px) = $140
• Quantity (QXd) = $750

Therefore:

• PED = -3 * (140 / 750) = -0.56

b.

Since PED < 1, the demand is inelastic.