4.The Smart Toys Company manufactures and sellseducational toys. An empirical demand function for one of thefirm's products has been estimated over the last 21 quartersusing regression analysis. The estimated demand functionis:Q, = -11,000 - 50P, + .5A+ .25I + 25P,Here Q, is quantity (measured in units) of Smart Toys, P,= $50is price of Smart Toys (measured in dollars), A = $50,000 isadvertising (measured in dollars), I= $40,000 is disposableincome per capita (measured in dollars), and P, = $100 is theprice (measured in dollars) of another toy manufactured by acompetitor, ABC Toys.a. Use the estimated demand function and the values for theindependent variables to calculate the demand for SmartToys "Q".b. Calculate and interpret (elastic or inelastic; complements orsubstitutes) the point cross-price elasticity of demand.c. Calculate and interpret the point income elasticity ofdemand.d. Calculate and interpret the point price elasticity of demand.

Given: Qy= -11000 – 50Py + 0.5A + 0.25 I + 25Px Py=$50 , A= $50000 , I= $40000, Px=$100 Point…

Answered: 4. The Smart Toys Company manufactures…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1
A 5 percent increase in the price of digital apps reduces the number of tablet devices demanded by 2 percent. The cross price elasticity of demand is (Enter your response rounded to two decimal places and include a minus sign if necessary.) The cross price elasticity of demand indicates that tablet devices and digital apps are complements 3 unrelated goods substitutes Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
If possible, please include made-up numerical values.
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