Compute the cross-price elasticity of demand

Reference no: EM1329049

Supply and Demand and Elasticity Question

The demand for company X product is givien by Q(x) = 12 - 3P(x)+ 4P (y)
Suppose good X sells for $3.00 per unit and good Y sells for $1.50 per unit.

a. Calculate the cross-price elasticity of demand between goods X and Y at the given prices.
b. Are goods X and Y substitutes or complements?
c. What is the own price elasticity of demand at these prices?
d. How would your answers be to parts a and c change if the price of X dropped to
$2.50 per unit?

Reference no: EM1329049

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