1. The demand for good X is given by Qdx = 1,200 -P+P,-8P, +M. Research shows that the prices ofrelated goods are given by Py-PHP 5,900 and P=PHP $90, while the average income of individuals consuming this productis M=PHP 55,000.a. How many units of the good X will be purchased when P,= PHP 4,910? (Interpret your result.)b. Calculate the Own price elasticity using the function. Is it elastic? or inelastic? (Interpret your result.)c. Calculate the Cross-price elasticity using P, as the price of related goods. Are good Y substitutes? Orcomplements? (Interpret your result.)d. Calculate the Cross-price elasticity using Pz as the price of related goods. Are good Z substitutes? Orcomplements? (Interpret your result.)e. Calculate the Income Price elasticity. Is X an inferior good? Luxury? Or Necessity? (Interpret your result.)f. InP+InP,- 8lnP, +InM,Suppose that the demand function is in log-linear form: InQdx 7-and the that the prices of related goods are given by P,=PHP 5,900 and P=PHP $90, while the average incomeof individuals consuming this product is M-PHP 55,000. Also, the good X will be purchased when P= PHP 4,910.How much is the projected quantity demanded for good X? Interpret your result.

Since you have provided multiple subparts questions, we will solve the first three sub-parts for…

1. The demand for good X is given by Qdx = 1,200 -P,+,-8P, +M. Research shows that the prices of related goods are given by P-PHP 5,900 and P-PHP $90, while the average income of individuals consuming this product is M=PHP 55,000. a. How many units of the good X will be purchased when P= PHP 4,910? (Interpret your result.) b. Calculate the Own price elasticity using the function. Is it elastic? or inelastic? (Interpret your result.) c. Calculate the Cross-price elasticity using P, as the price of related goods. Are good Y substitutes? Or complements? (Interpret your result.) Colculato the Crocc prico olacticity ucing R or the prico of rolatod goods Aro good 7 cubctitutoc? Or

1. The demand for good X is given by Qdx = 1,200 -P,+,-8P, +M. Research shows that the prices of related goods are given by P-PHP 5,900 and P-PHP $90, while the average income of individuals consuming this product is M=PHP 55,000. a. How many units of the good X will be purchased when P= PHP 4,910? (Interpret your result.) b. Calculate the Own price elasticity using the function. Is it elastic? or inelastic? (Interpret your result.) c. Calculate the Cross-price elasticity using P, as the price of related goods. Are good Y substitutes? Or complements? (Interpret your result.) Colculato the Crocc prico olacticity ucing R or the prico of rolatod goods Aro good 7 cubctitutoc? Or

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4) Firm A sells products x and z; the first, at a price of $ 30, sells 200 units and the well z manages to sell 400 units. To increase his sales, he decides to lower the price from x to $ 20, but this variation produces a decrease in the sale of z to 80 units: a) Calculate the cross elasticity b) What kinds of goods are x and z between them? Explain why. c) Give 2 examples of these types of goods.
8. Substitutes, complements, or unrelated? You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin pops, flopsicles, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin pops decreases by 10%, the quantity of flopsicles sold decreases by 9% and the quantity of kipples sold increases by 9%. Your job is to use the cross-price elasticity between penguin pops and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following…
Problem 1 In the following scenarios, is the good described a normal good, an inferior good, or is there not enough information to say? Briefly justify your answer. a) Richard's income doubles and he goes from buying 4 apples per week to buying 5 apples per week. The prices of apples and any related goods do not change. b) Terri's income goes down by 50% and she goes from buying a bottle of tequila every week to buying one every month. At the same time, the price of tequila doubles. c) The price of potatoes goes up by 20% and Seamus buys 10% more potatoes. His income and the prices of related goods do not change. Hint: think about this one in the context of another topic you learned about this week.
How does the law of diminishing marginal utility relate to changing income? Select one: a. The marginal benefit of an extra dollar of income rises as income rises. b. The marginal benefit of an extra dollar of income falls as income rises. c. The total utility gained from a small income is higher than the total utility gained from a high income. d. The total utility gained from a high income is higher than the total utility gained from a low income.
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