A3.5 The monthly demand for personal pizzas depends on the price of a personal pizza and the
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A3.5 The monthly demand for personal pizzas depends on the price of a personal pizza and the price of a separate related good. The demand function for personal pizzas is Qd = 480 - 5P - 10Pj where Qd is the number of personal pizzas demanded per month, P is the price of a personal pizza, and Pj is the price of the related good.
a. Suppose that P = $6 and Pj = $8. What does the cross-price elasticity of demand equal?
b. Based on the answer to part
a, is the related good a substitute or a complement to pizza?
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