The following is the demand function for goodsx q=160-5p1+3p2 where q is the quantity demanded for good, p1 is the price of good 1, p2 is the price of good 2, suppose p1 =20 and p2 = 30, Calculate own price elasticity of demand and cross elasticity of demand and interpret your results
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The price elasticity of demand is calculated as the percentage change in quantity demanded ((110 - 100)/100 = 10%) divided by a percentage change in price ($2 - $1.50 / $2).
The price elasticity of demand, in this case, is 0.4. Since the result is less than 1, it is inelastic.
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