The demand for Wanderlust Travel services (X) is estimated to be {Q_X}=22,000-2.5{P_x}+4{P_y}-M+
Question: The demand for Wanderlust Travel services (X) is estimated to be
\[{{Q}_{X}}=22,000-2.5{{P}_{x}}+4{{P}_{y}}-M+1.5{{A}_{x}}\]where Ax represents the amount of advertising spent on X and the other variables have their usual interpretations. Suppose that the price of good X is $450, good Y sells for $40, the company utilizes 3,000 units of advertising, and consumer income is $20,000.
(a) Calculate the own price elasticity of demand at these values of prices, income, and advertising
(b) Is demand elastic, inelastic or unitary elastic?
(c) How will your answers will change if the price of Y increases to $50.
Price: $2.99
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Deliverables: Word Document
Deliverables: Word Document
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