Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows: Qp = 89, 830 – 40Ps + 20Px + 15P, + 21 + 0. 001A + 10W Where, QD = quantity purchased, Ps= the price of smooth sailing sailboats, Px= the price of Company X's sailboat, Pr = the price of Company Y's motorboat, I= per capita income in dollars, A = dollars spent on advertising, and W = number of favorable days of weather in the southern region of the United States. a) Suppose that Ps = $9,000, Px= $9,500, Py = $10,000, I = $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point. b) Is Ep, elastic, inelastic, or unitary elastic in part (a)? Justify?

Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows: Qp = 89, 830 – 40Ps + 20Px + 15P, + 21 + 0. 001A + 10W Where, QD = quantity purchased, Ps= the price of smooth sailing sailboats, Px= the price of Company X's sailboat, Pr = the price of Company Y's motorboat, I= per capita income in dollars, A = dollars spent on advertising, and W = number of favorable days of weather in the southern region of the United States. a) Suppose that Ps = $9,000, Px= $9,500, Py = $10,000, I = $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point. b) Is Ep, elastic, inelastic, or unitary elastic in part (a)? Justify?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Answer only subpart 4
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