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Suppose the demand curve for good X is: QDX = 20 -Px - 2Py + 5M, where: Px is the price of good X, Py is the price of good Y , and M is income.
A)If Px = 10, Py = 4, and M = 10, what is the demand for good X?
B) Solve for the own-price elasticity of demand, the cross-price elasticity of demand of good X with respect to the price of good Y, and the income elasticity of demand
C) Solve for the inverse demand curve when Py= 4 and M= 10, and draw this line on the graph below. Then, assume that the price of good Y has increased, so now Py= 6 and M= 10. Solve for the new inverse demand curve and draw on the graph below.
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