1. The demand function for a product is given by Q= 1200 –- ЗР, — 0.1P, Where Px = 140? AND P,= 300 a. What is the own price elasticity of demand? ! b. Is demand for Qx elastic or inelastic? : c. What is the cross price elasticity of demand been X and Z? d. Are X and Z complements or substitutes? : 2. Last month, Rick's Bike Shop, Inc. increased the price on the 24 ounce can of bearing grease by 4%. In response, sales dropped by 20%. a. Calculate the point price elasticity of demand for bearing grease. Calculate the optimal price for bearing grease if marginal cost is $10 per unit. Suppose the cross price elasticity of demand between 3. good X and Y is 4. How much would the price of good Y have to change in order to increase the consumption of good X by 20%?
1. The demand function for a product is given by Q= 1200 –- ЗР, — 0.1P, Where Px = 140? AND P,= 300 a. What is the own price elasticity of demand? ! b. Is demand for Qx elastic or inelastic? : c. What is the cross price elasticity of demand been X and Z? d. Are X and Z complements or substitutes? : 2. Last month, Rick's Bike Shop, Inc. increased the price on the 24 ounce can of bearing grease by 4%. In response, sales dropped by 20%. a. Calculate the point price elasticity of demand for bearing grease. Calculate the optimal price for bearing grease if marginal cost is $10 per unit. Suppose the cross price elasticity of demand between 3. good X and Y is 4. How much would the price of good Y have to change in order to increase the consumption of good X by 20%?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:1. The demand function for a product is given by Q= 1200 –-
ЗР, — 0.1P,
Where Px = 140? AND P,= 300
a. What is the own price elasticity of demand? !
b. Is demand for Qx elastic or inelastic? :
c. What is the cross price elasticity of demand been X and Z?
d. Are X and Z complements or substitutes? :
2.
Last month, Rick's Bike Shop, Inc. increased the price on
the 24 ounce can of bearing grease by 4%. In response, sales
dropped by 20%.
a. Calculate the point price elasticity of demand for bearing grease.
Calculate the optimal price for bearing grease if marginal cost is $10 per unit.
Suppose the cross price elasticity of demand between
3.
good X and Y is 4. How much would the price of good Y have
to change in order to increase the consumption of good X by
20%?
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