Initial values are: PM = $20000 PG = $1.00 I = $15000 A = $10000 This function is: QT = 200 -.01PT +.005PM -10PG +.01I +.003A please Answer from 4 to 5 complete **Question 4: Competition and Cross-Price Elasticity**4.(a). Competition might be a worry for Toyota. Let $ P_M $ represent the price of Mazdas. Calculate the point Mazda cross-price elasticity of demand with $ P_M = \$20000 $ and $ P_T = \$20000 $ (which should make $ Q_T = 270 $). Other variables are given at the top before question #1. The formula is:\[E_{TM} = \frac{\partial Q_T}{\partial P_M} \cdot \frac{P_M}{Q_T}\](b). Does this elasticity indicate that the demand for Toyotas is relatively responsive to changes in the price of Mazdas? Explain why or why not.---**Question 5: Advertising Elasticity**5.(a). Calculate the point advertising elasticity of demand for advertising expenditures ($ A $) = $10000, also with $ P_T = \$10000 $ (which should make $ Q_T= 370 $). Other variables and their values are given at the top, before question #1. The formula is:\[E_A = \frac{\partial Q_T}{\partial A} \cdot \frac{A}{Q_T}\](b). Does this elasticity indicate that demand for Toyotas is very responsive to changes in advertising expenditures (thus suggesting that advertising is a very important way to increase sales)? Explain why or why not.

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Answered: 4.(a). Competition might be a worry for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Initial values are: P_M = $20000 P_G = $1.00 I = $15000 A = $10000

This function is: Q_T = 200 -.01P_T +.005P_M -10P_G +.01I +.003A

please Answer from 4 to 5 complete

**Question 4: Competition and Cross-Price Elasticity**

4.(a). Competition might be a worry for Toyota. Let $ P_M $ represent the price of Mazdas. Calculate the point Mazda cross-price elasticity of demand with $ P_M = \$20000 $ and $ P_T = \$20000 $ (which should make $ Q_T = 270 $). Other variables are given at the top before question #1. The formula is:

\[
E_{TM} = \frac{\partial Q_T}{\partial P_M} \cdot \frac{P_M}{Q_T}
\]

(b). Does this elasticity indicate that the demand for Toyotas is relatively responsive to changes in the price of Mazdas? Explain why or why not.

---

**Question 5: Advertising Elasticity**

5.(a). Calculate the point advertising elasticity of demand for advertising expenditures ($ A $) = $10000, also with $ P_T = \$10000 $ (which should make $ Q_T= 370 $). Other variables and their values are given at the top, before question #1. The formula is:

\[
E_A = \frac{\partial Q_T}{\partial A} \cdot \frac{A}{Q_T}
\]

(b). Does this elasticity indicate that demand for Toyotas is very responsive to changes in advertising expenditures (thus suggesting that advertising is a very important way to increase sales)? Explain why or why not.

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5.(a). Calculate the point advertising elasticity of demand for advertising expenditures (A) = $10000 also with P_T= $10000 (which should make Q_T= 370). Other variables and their values are given at the top, before question #1. The formula is:

(b). Does this elasticity indicate that demand for Toyotas is very responsive to changes in advertising expenditures (thus suggesting that advertising is a very important way to increase sales)? Explain why or why not.

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