Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_X = $60.00 P_Y = $40.00. I = $2500, and A = $5,000. When price of good X is increased to $75.00, we know that demand for good X is elastic.

Question

Quizplus · Accepted Answer

If the demand for good X is elastic, an increase in price will result in a relatively larger decrease in quantity demanded. Therefore, if the price of good X is increased to $75.00 and we still see a decrease in quantity demanded, it implies that the demand is elastic.

Given the Demand Function QX = 1500 - 100PX

Given the Demand Function Q_X = 1500 - 100P_X