Qx=100−10Px−2Py+0.1M+0.2A where Qx is unit sales of good x, Px is the price of good x,...

Qx=100−10Px−2Py+0.1M+0.2A where Qx is unit sales of good x, Px is the price of good x, Py is the price of good y, M is per-family money income in thousands of dollars, and A is the level of advertising expenditures in thousands of dollars.

Suppose that Px=$2,Py=$3,M=$50,andA=$20Px=$2,Py=$3,M=$50,andA=$20. Calculate the price elasticity of demand.

• Silkwood Enterprises specializes in gardening supplies. The demand for its new brand of fertilizer is given by the equation Q=120−4P

a. Silkwood is currently charging $10 a pound. What is the price elasticity of demand?

b. At this price, what is Silkwood’s marginal revenue?

Expert Solution

Rahul Sunny answered 2 years ago

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