**Question: **Below is a mathematical demand function for new Cadillac’s sold per year for a dealer.

\[{{Q}_{C}}=200-0.01{{P}_{C}}+0.005{{P}_{L}}-10{{P}_{G}}+0.01Y+0.003A\] where:

P_{C} = the average price of Cadillac’s

P_{L} = the average price of Lincoln Continentals

P_{G} = the price of gasoline

Y = the average family income

A = dollars spent annually on advertising.

(a) Find the point price elasticity of demand if P_{C} = $11,000, P_{L} = $10,000, P_{G} = $0.60

Y= $6,000, and A = $2,000.

(b) Is the price elasticity of demand elastic, unitary elastic, or inelastic? Why?

(c) Find the arc cross elasticity of demand for Cadillac’s and Continentals between P_{L} = $10,000 and P_{L }= $9,000. [All other figures except Q, remain the same as part (a)

(d) Are Cadillac’s and Lincolns substitutes or complements? Why?

**Solution:**The solution consists of 221 words (2 pages)

**Deliverables:**Word Document