A firm has estimated the following demand function for its product:Q = 258 - 2 Px + 0.101 + 1.0 P, + 14A,Where Qx is the quantity demanded of X per month (in thousands), P is the price of X, I is an index of consumer income, Py is theprice of competing product Y, and Ax is the advertising expenditures for X per month (in thousands).Assume that Px = 10, I = 120, Py = 10, and A, = 10.The Income Elasticity of Demand (E) is:A.3B.0.30.030.003

Elasticity measures the responsiveness of change in one variable due to changes in the other…

A firm has estimated the following demand function for its product: Q- 258 - 2 P,+ 0.101+ 1.0 P,+ 14A, Where Q, is the quantity demanded of X per month (in thousands), P, is the price of X I is an index of consumer income, P, is the price of competing product Y, and A, is the advertising expenditures for X per month (in thousands). Assume that P, 10, 1= 120, P, - 10, and A, - 10. The Income Elasticity of Demand (E) is: I 3. B. 0.3 0.03 D) 0.003

A firm has estimated the following demand function for its product: Q- 258 - 2 P,+ 0.101+ 1.0 P,+ 14A, Where Q, is the quantity demanded of X per month (in thousands), P, is the price of X I is an index of consumer income, P, is the price of competing product Y, and A, is the advertising expenditures for X per month (in thousands). Assume that P, 10, 1= 120, P, - 10, and A, - 10. The Income Elasticity of Demand (E) is: I 3. B. 0.3 0.03 D) 0.003

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose that the demand function of a new face cream is described by the demand function: Q(P, A) = P -1/2A 1/4 , where Q represents the quantity demanded, P represents price, and A represents advertising expenditures. (i) Compute the price elasticity of demand (eD) and the advertising elasticity of demand (eA ). (Please show your detailed calculations).
A demand function is given by: Qd = 52- P2 At the point (P,Q) = (2,48) the price elasticity of demand is equal to:
Imagine the demand function for your firm’s product is q = 1500 – 4P. How much is the Total revenue when q=100?
4x + 500 10x +9 the number of plants sold per day when the price is x dollars per plant. A garden shop determines the demand function q = D(x) = (a) Find the elasticity. (b) Find the elasticity when x=3. (c) At $3 per plant, will a small increase in price cause the total revenue to increase or decrease? (a) The elasticity is during early summer for tomato plants where q is M Ir
Question #2 Consider the following demand function for frozen dinners where QD is the quantity of frozen dinners demanded per week, P is the price per frozen dinner, PF is the price per fast food meal, Y is the average yearly consumer income, and A is the number of advertisements for frozen dinners. Demand Function for Frozen Dinners: QD = 1,000 – 10P + 20PF – 0.01Y + A Suppose that a frozen dinner sells for $4, a fast food meal sells for $6, average yearly consumer income is $50,000, and that there are 20 advertisements for frozen dinners. Calculate and interpret the income elasticity of demand. Calculate and interpret the cross-price elasticity of demand with respect to fast food meals.
The demand functions for a pineapple is given by p=-0.10x+15. a.) find the revenue function b.) how many pineapples will you sell when you are maximizing revenue? c.) what price gives the maximum revenue and what is the maximum revenue?
The inverse demand function for grapes is described by the equation p= 518- 5q, where p is the price in dollars per crate and q is the number of crates of grapes demanded per week. When p = $40 per crate, what is the price elasticity of demand for grapes?
Assume you are managing a food processing plant in Ethiopia. The demand function for one of your product is given as Qd=50-2p. a) Find the point price elasticity if price is 15 ETB? Is it elastic or inelastic? b) How do you interpret the elasticity result? c) In order to get more revenue what will be your recommendation. Is it to increase price or decrease price? Why?
a) The demand function for a product is p = 60 3-9/15) where q is the number of units and p is the price of one unit. At what price will the demand be 15 units? How many units will be demanded if the price is $41.60?
The manager of a bicycle shop has found that, at a price (in Rands) of p(x) = 150 –x/4 per bicycle, x bicycles will be sold . Answer the following:• Find an expression for the total revenue from the sale of x bicycles. (Hint: Revenue = Demand *Price. )• Find the expression for the quantity to be sold q if the demand function demand is given byp = -10q + 3200• What is the number of bicycles x, sold if the price is R40
a) What is the inverse demand function? b) If the current price is optimal what is then MC?
4. An economic consultant provides a firm's marketing manager with the following estimate of the demand function for the firm's product: Qx = 1240 – 3.13Px - 0.611P, + 2.01M + 0.30AX Px = the price of the firm's product per unit; Py = the price of another good per unit; M = money income for the average consumer; Ax = advertising costs for the firm's product. The demand function shown above indicates that: A. The firm's good (X) and the other good (Y) are substitutes and that X is an inferior good B. The firm's good (X) and the other good (Y) are complements and that X is an inferior good C. The firm's good (X) and the other good (Y) are substitutes and that X is a normal good D. The firm's good (X) and the other good (Y) are complements and that X is a normal good