30 P= √I droppings" can be modeled by,

3

A standard "money demand" function used by macroeconomists has the form In(m) = Bo + B, In(GDP) + B2R, Where m is the quantity of (real) money, GDP is the value of (real) gross domestic product, and R is the value of the nominal interest rate measured in percent per year. Supposed that B, = 2.15 and B, = -0.06. %3D What is the expected change in m if GDP increases by 3%? The value of m is expected to V by approximately%. (Round your response to the nearest integer) What is the expected change in m if the interest rate increases from 1% to 9%? The value of m is expected to ▼ by approximately %. (Round your response to the nearest integer)

How does time-period or length of run affects the behavior of the supply function?

1 1. sec-1 x = cos™ -

MK Corp estimates that its demand function is as follows:Q = 150 – 5.4 P + 0.8 A + 2.8 Y -1.2 P*where Q is the quantity demanded per month (in 000s units), P is the product’s price (in TND), A isthe firm’s advertising expenditure (in tnd’000 per month), Y is per capita disposable income (intnd’000), and P* is the price of AJ Corp. 3 (a) During the next five years, per capita disposable income is expected to increase by tnd2,500.What effect will this have on the firm’s sales volume?(b) If MK wants to change its price by enough to offset the effect of the increase in income, byhow much must it raise its price?(c) If MK raises its price by this amount, will it increase or decrease the price elasticity ofdemand? Explain.(d) What can be said about the relationship between the products of MK and AJ?(e) If next year MK intends to charge tnd15 and spend tnd10,000 per month on promotion, whileit believes per capita income will be tnd12,000 and AJ’s price will be tnd3, calculate theincome…

2

QUESTION 1 Given a demand curve of P = 172 - 9Qd and supply of P = 9 + 2Qs, find the equilibrium price (Pe)