Demand Curve : Q = 10-2P+Ps

Given Ps = 2

=>Q = 12-2P

a) When Price =1 , Quantity demanded = 10

Price Elasticity of Demand =Change in quantity demanded/Change in price *(Price/Quantity)

Therefore, Price Elasticity of Demand is Ed = -2* (1/10)

=> - 0.2 is the price elasticity of demand.

Cross Price Elasticity of Demand = Change in Quantity/ Change in Price of substitute*(Price

of substitute / Quantity

=> 1 * (2/10) = 0.2

Cross price elasticity = 0.2.

b) When Price = 2, Quantity demanded = 8

Price Elasticity of Demand =Change in quantity demanded/Change in price *(Price/Quantity)

Price Elasticity of Demand is Ed = (-2)* (2/8) = -4/8

=> - 0.5 is the price elasticity of demand.

Cross Price Elasticity of Demand = Change in Quantity/ Change in Price of substitute*(Price

of substitute / Quantity

= > 1 * (2/8) = 0.25

Cross price elasticity = 0.25.