A firm’s demand function is as follows: Qx = 400 - 5Px + Py - 2Pz + 2I. Assume initial values of Px = 50, Py = 20, Pz = 20, I = 50
a. Determine the quantity of X that will be sold assuming the initial values.
b. Develop the corresponding Total Revenue and Marginal Revenue Functions.
c. Determine the quantity and price that maximize revenue.
d. What does MR equal at this quantity? What does Price elasticity of demand equal at this quantity?
e. Determine the cross elasticity of demand between Qx and Py where Py ranges between 20-40. What relationship do X and Y share?
f. Determine the income elasticity of demand in the income range 50-150.
g. Determine the cross elasticity of demand of X and Pz where Pz ranges between 20-60. What relationship do X and Z share?