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Question regarding the determinants of demand

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Reference no: EM131104984

Determinants of Demand

Suppose the demand (in millions) for a computer game takes the form of the following equation:

Q = 250 - 10P + 20P(y)

where P is the price of the game and P(y) is the price of a competitor's similar game. Assume the price of the game is currently $50 and the price of the competitor's game is $40.

Based on the provided information, compute the following:

a. Quantity demanded at these prices

b. Price elasticity of demand

c. Cross-price elasticity of demand

Analyze the results and determine if the game maker should raise the price of its game.

Reference no: EM131104984

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