The Demand for Company X's Product Is Given by Q_x

question 55

Essay

The demand for company X's product is given 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 to parts a and c change if the price of X dropped to $2.50 per unit?

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Definitions:

Vitamins

Organic compounds that are necessary in small amounts for the body to maintain health, usually obtained from food, as most cannot be synthesized by the body.

Coenzymes

Non-protein chemical compounds that bind to an enzyme and help it to catalyze a reaction.

Reversible Inhibitor

A substance that forms weak bonds with an enzyme, temporarily interfering with its function; a reversible inhibitor is either competitive or noncompetitive. Compare with irreversible inhibitor.

Chemical Bonds

The attraction between atoms or molecules that allows the formation of chemical compounds, can be ionic, covalent, or metallic.