Suppose the demand function for a firm's product is given by In Qx=7-1.5 In Px+2 In Py-0,5 In M + In A where:
Px= $15
Py=$6
M = $40,000, and A = $350 a. Determine the own price elasticity of demand, and state whether demand is elastic, inelastic, or unitary elastic. Own price elasticity: _______________
Demand is: unitary elastic
b. Determine the cross-price elasticity of demand between good X and good Y; and state whether these two goods are substitutes or complements. Cross-price elasticity: ________________
These two goods are: