Question-

Utilizing the demand functions and the values below, calculate the following elasticity.

Knee Surgery: Q^D(p)=50-0.5p

Physical Therapy: Q^D(p,pKS)=65-3p-pKS

Hyperbaric Chamber: Q^D(p)=40-p+10Y

pKS^e=20

pPT^e=5

pHC^e=100

Y=10

a) Price elasticity of Knee Surgery

b) Price elasticity of Physical Therapy

c) Describe which good is more elastic.

d) Cross-Price elasticity of Physical Therapy with respect to Knee Surgery; what type of relationship exists between Knee Surgery and Physical Therapy?

e) Income elasticity of Hyperbaric Chambers; what type of good is a hyperbaric chamber?

Now a new cutting edge technology for knee surgery is deployed across the market. The new technology increases the price of a surgery. Along with the new technology hospitals launch an ad campaign praising the improved quality, faster recovery time, and the ability to regain full strength. The new demand is given below and the equilibrium price equals $28:

 Knee Surgery: Q^D(p)=50-0.25p

f) New Price elasticity of Knee Surgery

g) Graph the two demand curves for Knee Surgery before and after the new technology and ad campaign.

h) What happens to the demand for Knee surgery in terms of elasticity (no math required)?