For each of the following cases, calculate the point price elasticity of demand, and state whether demand is elastic, inelastic, or unit elastic. The demand curve is given by: Q_D = 5,000 - 50 P_X

When the price of the product is $50; When the price of the product is $75.

a) For each case, should the firm raise or lower the prices to maximize revenues? Why or Why not? Explain.

b) Suppose the the income elasticity of demand is 1.5; what impact will a recession cause for the demand for your product? Why? Explain.

c) The cross-price elasticity of demand between this good and a related good is -3.5; what can you determine about consumer demand for your product from this information? Suppose the price of the related good changes by 10%? How will this affect your sales? Explain.