Setting: U.S. Auto manufacturers are trying to develop a multivariate function with which to estimate the demand for their gas-electric hybrid compact cars. Here is one that Motors General developed for its Jolt: Qj = 65000 -20Pj+20Pf+35Pt-5Pb+0.2Tc+0.05Y+ 10Mg + 0.04A Where Qj = the number of Jolts demanded per week. Pj = the price of each new Jolt (in $). Pf=the price of each new Ford gas-electric hybrid (in $). Pt the price of each new Toyota gas-electric hybrid (in $). Pb = the price of replacement batteries for the Jolt (in $). Tc = the amount of tax credit incentive offered with the purchase of a new hybrid (in $). Y = average weekly disposable income of a typical Jolt purchaser (in $). Mg the miles per gallon of gas rating of the Jolt (in miles per gallon). A = average weekly Jolt advertising expenditure (in S). What is the point elasticity of Jolt demand with respect to the advertising expenditure (A) of $50000. Work out completely and show the sign (+ or -); carry out to four decimal places. The formula is: OQ, A E- да 2 A) -0.031 B) +0.0003 C) +0.0005 D) +0.0009 E) +0.0015 F) +0.002
Setting: U.S. Auto manufacturers are trying to develop a multivariate function with which to estimate the demand for their gas-electric hybrid compact cars. Here is one that Motors General developed for its Jolt: Qj = 65000 -20Pj+20Pf+35Pt-5Pb+0.2Tc+0.05Y+ 10Mg + 0.04A Where Qj = the number of Jolts demanded per week. Pj = the price of each new Jolt (in $). Pf=the price of each new Ford gas-electric hybrid (in $). Pt the price of each new Toyota gas-electric hybrid (in $). Pb = the price of replacement batteries for the Jolt (in $). Tc = the amount of tax credit incentive offered with the purchase of a new hybrid (in $). Y = average weekly disposable income of a typical Jolt purchaser (in $). Mg the miles per gallon of gas rating of the Jolt (in miles per gallon). A = average weekly Jolt advertising expenditure (in S). What is the point elasticity of Jolt demand with respect to the advertising expenditure (A) of $50000. Work out completely and show the sign (+ or -); carry out to four decimal places. The formula is: OQ, A E- да 2 A) -0.031 B) +0.0003 C) +0.0005 D) +0.0009 E) +0.0015 F) +0.002
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Setting: U.S. Auto manufacturers are trying to develop a multivariate function with which to
estimate the demand for their gas-electric hybrid compact cars. Here is one that Motors General
developed for its Jolt:
Qj = 65000 -20Pj+20Pf+35Pt-5Pb+0.2Tc+0.05Y+ 10Mg + 0.04A
Where
Qj = the number of Jolts demanded per week.
Pj = the price of each new Jolt (in $).
Pf=the price of each new Ford gas-electric hybrid (in $).
Pt the price of each new Toyota gas-electric hybrid (in $).
Pb = the price of replacement batteries for the Jolt (in $).
Tc = the amount of tax credit incentive offered with the purchase of a new hybrid (in $).
Y = average weekly disposable income of a typical Jolt purchaser (in $).
Mg the miles per gallon of gas rating of the Jolt (in miles per gallon).
A = average weekly Jolt advertising expenditure (in S).
What is the point elasticity of Jolt demand with respect to the advertising expenditure (A) of
$50000. Work out completely and show the sign (+ or -); carry out to four decimal places.
The formula is:
OQ, A
E-
да 2
A) -0.031
B) +0.0003
C) +0.0005
D) +0.0009
E) +0.0015
F) +0.002
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