1. The demand for good X is given by Qdx 1,200-P+P,-8P, +M. Research shows that the prices of related goods are given by Py-PHP 5,900 and P-PHP $90, while the average income of individuals consuming this product is M=PHP 55,000. d. Calculate the Cross-price elasticity using Pz as the price of related goods. Are good Z substitutes? Or complements? (Interpret your result.) e. Calculate the Income Price elasticity. Is X an inferior good? Luxury? Or Necessity? (Interpret your result.) f. Suppose that the demand function is in log-linear form: InQdx = 7-InP+InP,-8lnP, + InM, and the 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. 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. 10

1. The demand for good X is given by Qdx 1,200-P+P,-8P, +M. Research shows that the prices of related goods are given by Py-PHP 5,900 and P-PHP $90, while the average income of individuals consuming this product is M=PHP 55,000. d. Calculate the Cross-price elasticity using Pz as the price of related goods. Are good Z substitutes? Or complements? (Interpret your result.) e. Calculate the Income Price elasticity. Is X an inferior good? Luxury? Or Necessity? (Interpret your result.) f. Suppose that the demand function is in log-linear form: InQdx = 7-InP+InP,-8lnP, + InM, and the 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. 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. 10

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 1SQ

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Consider the market for CD players, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity of a good demanded grows in response to the growth of purchases by other individuals (as indicated by the demand curve "Demand" in the figure). Suppose that the price is initially $90 where the quantity demanded is 120 (thousand CD players per month). If the price of CD players falls to $50, demand will increase to 180 thousand CD players per month. (Enter your response using an integer.) Of this increase, price effect and thousand units of the 60 thousand-unit increase is the pure thousand units of the increase is the bandwagon effect. C Price 200- 180- 160- 140- 120+ 100- 80- 60- 40- 20- 0+ 0 Doo Demand 20 P150 D60 P120 180 40 60 80 100 120 140 160 180 200 220 CD Players (thousands per month)
Consider the market for CD players, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity of a good demanded grows in response to the growth of purchases by other individuals (as indicated by the demand curve "Demand" in the figure). Suppose that the price is initially $110 where the quantity demanded is 90 (thousand CD players per month). If the price of CD players falls to $50, demand will increase to thousand CD players per month. (Enter your response using an integer.) of this increase, thousand units of the 90 thousand-unit increase is the pure price effect and thousand units of the increase is the bandwagon effect. The bandwagon effect causes the demand for CD players to be more otherwise be the case (without network externalities). ▼than would 200- 180 160 Demand 140 120- 100- 80- 60- 40- 20- 0+ 0 Deo 20 D150 D80 P120 P180 40 60 80 100 120 140 160 180 200 220 CD Players (thousands per month) Q Next
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Suppose the National Football League (NFL) wants to make Super Bowl tickets affordable for more football fans. The league therefore sets the price of a Super Bowl ticket below what is generally considered a fair market price. Suppose the price of a ticket for a regular seat at the Super Bowl is set at just $500. People who have tickets, however, can turn resell them online for $2,500 each, or more. If there are no transaction costs associated with online sales of Super Bowl tickets, the true cost to a fan of attending the Super Bowl is:
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