1. The demand curve for a product is given by Qx= 1,200 – 3Px – 0.1Pz Where Pz SR300. What is the own price elasticity of demand when Px= SR140? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to a. charge a price below SR140? b. What is the own price elasticity of demand when Px= SR240? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price above SR240? c. What is the cross price elasticity of demand between good X and good Z when Px=SR140? Are good X and good Z substitutes or complements?

1. The demand curve for a product is given by Qx= 1,200 – 3Px – 0.1Pz Where Pz SR300. What is the own price elasticity of demand when Px= SR140? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to a. charge a price below SR140? b. What is the own price elasticity of demand when Px= SR240? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price above SR240? c. What is the cross price elasticity of demand between good X and good Z when Px=SR140? Are good X and good Z substitutes or complements?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 3PA: Suppose the price elasticity of demand for heating oil is 02. in the short run and 0.7 in the long...

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