00:02
Hello, before answering this question, we need to find what will be the amount of quantity of good x.
00:12
So let's calculate this, given all this information.
00:17
So quantity of good x will be equal to 120 minus 5 multiplied by the price of x.
00:30
And this price is 300 plus 2 times a price of good y and it's 250 plus 0 .25 multiplied by income.
01:00
Income is given, income is 10 ,000 and and finally 1 multiplied by advertising units which is 2 ,000.
01:23
And if we calculate this, quantity will be equal to 3 ,620.
01:33
And now we can find all these different elasticity.
01:38
So let's start with part a.
01:45
Price elasticity of demand using the point elasticity will be equal to derivative of quantity with respect to price multiplied by price divided by quantity so it's equal to negative 0 .45 and we can interpret this since this number is greater than one in absolute sorry it's less than one in absolute value, demand is inelastic...