Question: Suppose the demand for good x is ln Qxd = 21 0.8 ln Px 1.6 ln Py + 6.2 ln M + 0.4 ln Ax.

Suppose the demand for good x is ln Qxd = 21 0.8 ln Px 1.6 ln Py + 6.2 ln M + 0.4 ln Ax. Where Py =

$10, M = $55,000 and A = $400. What is the elasticity of demand where Px = 25. Would you increase or

decrease price to increase revenues? Explain.

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