The demand curve for a product is given by Qdx= 1,000 -2Px + .02Pz' where Pz = $400.
a. What is the own price elasticity of demand when Px = $154? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price below $154?
b. What is the own price elasticity of demand when Px = $354? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price above $354?
c. What is the cross-price elasticity of demand between good X and good Z when, Px = $154? Are goods X and Z substitutes or complements?