Suppose that the demand curve for a product is given by= 100 – 2 Px+a Py,= £20 is the price of another product, and where aPy%3Dwhere Px = £20, where= 8.a) Calculate the demand for good X in this market at the current price level.How much revenue would the firm make?b) If the firm wishes to increase total revenue, would it need to increase ordecrease the current price of good X?c) Calculate the cross-price point elasticity between goods X and Y at thecurrent price level. Are the goods complements or substitutes?Note: The writing is clear and abbreviations are not allowed.

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a) Calculate the demand for good X in this market at the current price level. How much revenue would the firm make?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose that the demand curve for a product is given by
= 100 – 2 Px+a Py,
= £20 is the price of another product, and where a
Py
%3D
where Px = £20, where
= 8.
a) Calculate the demand for good X in this market at the current price level.
How much revenue would the firm make?
b) If the firm wishes to increase total revenue, would it need to increase or
decrease the current price of good X?
c) Calculate the cross-price point elasticity between goods X and Y at the
current price level. Are the goods complements or substitutes?
Note: The writing is clear and abbreviations are not allowed.

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