Exam 18: Elasticities, Price-Distorting Policies, and Non-Price Rationing

Suppose a consumer's demand function is $x ( p ) = 100 - 3 p$ . a.What's the general equation for the own-price elasticity of demand for this consumer? b.What's the price elasticity of demand when p=25? c.Suppose instead that the demand function is $x \left( p _ { x } , p _ { y } \right) = 100 - 3 p _ { x } + p _ { y }$ .How does the equation for own-price elasticity change? d.Continue with the demand equation in (c).Suppose p=25.What's the cross-price elasticity for x? e.Continuing with part (d),what's the cross-price elasticity when the price of y is equal to 50?

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