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Section II: Application of demand elasticity The demand function for good X is as follows: X...

Section II: Application of demand elasticity

The demand function for good X is as follows:

X = 20 + 15PY + 5B -10PX

What is the slope of this demand curve?

If PX=10, PY=3, and B= 10 derive the:

Own demand elasticity at these values

Cross elasticity at these values

Income elasticity at these values.

Is good X elastic or inelastic at these values for income, price of good Y and price of good X? Is good Y a substitute or complementary good? And, is good X an inferior of normal good?

What is the price of good X that maximizes total revenue?

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