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5

Item5

Item 5 8 points

The demand curve for a product is given by Q_X^d= 1,200 - 3P_X- 0.1P_ZwhereP_z= $300.

a. What is the own price elasticity of demand whenP_x= $140? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price below $140?

Instruction:Enter your response rounded to two decimal places.

Own price elasticity:

Demand is:

(Click to select)

elastic

inelastic

If the firm prices below $140, revenue will:

(Click to select)

increase

decrease

not change

b. What is the own price elasticity of demand whenP_x= $240? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price above $240?

Instruction:Enter your response rounded to one decimal place.

Own price elasticity:

Demand is:

(Click to select)

inelastic

elastic

If the firm prices above $240, revenue will:

(Click to select)

not change

increase

decrease

c. What is the cross-price elasticity of demand between goodXand goodZwhenP_x= $140? Are goodsXandZsubstitutes or complements?

Instruction:Enter your response rounded to two decimal places.

Cross-price elasticity:

GoodsXandZare:

(Click to select)

substitutes

complements