Estimated demand for the company product

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Calculating price, income & cross price elasticity of demand

A company has the following demand function for its product.

Q=40,000-200P+500I+100Px

Where P is the price of the firm's product, I is household disposable income in thousands of $, and Px is the price of a competitor's product.

The firm charges a price of $ 100 per unit.
Estimated household income = $ 50. (in thousands of $)
The competitor's price = $ 95 per unit.

A. What is the estimated demand for the firm's product?
B. Determine the point price elasticity.
C. Determine the point income elasticity.
D. Determine the point cross price elasticity.

 

Reference no: EM1328246

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