Answered: 5. Calculate the point "self-service"…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

See similar textbooks

Related questions

Concept explainers

Question

Need help with Question 5.

Transcribed Image Text:Py = $300 PL = $1.50 I= $40000 A = $200000 This function is: Qx = 197000 -100PX +50PY +.025I +.02A+ 10000PL 1. Use the above to calculate the arc price elasticity of demand between Px= $250 and Px= $200. The arc elasticity formula is: AQ Р, + Р, 1 2 Ep ΔΡ Q, +Q2 2. Calculate the quantity demanded at each of the above prices and revenue that will result if the quantity is sold (fill in table below). Px $250 Qx Revenue $200 3. Marketing suggests lowering Px from $250 to $200. The size of the elasticity coefficient in #1 should tell you what is likely to happen to revenue. Explain why this is (or is not) a good marketing suggestion from a revenue viewpoint (note: your answer in #1 and the calculations in #2 should be giving the same message). If the implications in #1 and #2 differ, does the difference make sense (or did you make a mistake in #1 or #2)? 4. Calculate the point price elasticity of demand at Px = $250 (which should make Qx = 207000). Does this elasticity value indicate that the demand for Brand X washing machines is relatively responsive to changes in the price of these machines? Explain why or why not. The formula is: Ep ĉP, Qx X 5. Calculate the point "self-service" laundry cross-price elasticity of demand at PL = $1.50. Use Qx corresponding to Px = $250 with other variables and their values as given at the top, before question #1. Does this elasticity imply that the demand for Brand X washers is relatively responsive to changes in (Pt)? Explain why or why not. The formula is: ôQx , PL ĉP, Qx E XL 6. Calculate the point advertising elasticity of demand at A = $200,000. Use Qx corresponding to Px = $200 with other variables and their values given at the top before question #1. What does this elasticity imply about the relative responsiveness of the demand for Brand X washers with respect to advertising expenditures (A)? Explain. The formula is: A E A Qx

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

$Point Estimation, Limit Theorems, Approximations, and Bounds$

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, statistics and related others by exploring similar questions and additional content below.

Similar questions