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The demand curve for a product is given by =1500-5PX+0
The demand curve for a product is given by =1500-5PX+0.2PZ, where PZ = $200.
(1) What is the own price elasticity of demand when PX= $120? Is demand elastic or inelastic at this price? What would happen to the firm' s revenue if it decided to charge a price below $120?
(2) What is the own price elasticity of demand when PX= $220? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price above $220?
(3) What is the cross-price elasticity of demand between good X and good Z when PX = $220? Are goods X and Z substitutes or complements?
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