Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows: QD= 89,830-40PS+20Px+15Py+2I+0.001A+10W Where, QD = quantity purchased, PS = the price of smooth sailing sailboats, PX = the price of Company X’s sailboat, PY = 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. 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. Is 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: QD= 89,830-40PS+20Px+15Py+2I+0.001A+10W Where, QD = quantity purchased, PS = the price of smooth sailing sailboats, PX = the price of Company X’s sailboat, PY = 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. 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. Is elastic, inelastic, or unitary elastic in part (a)? Justify?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Smooth Sailing, Inc., has estimated the
QD= 89,830-40PS+20Px+15Py+2I+0.001A+10W
Where,
QD = quantity purchased,
PS = the price of smooth sailing sailboats,
PX = the price of Company X’s sailboat,
PY = 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.
- 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. - Is elastic, inelastic, or unitary elastic in part (a)? Justify?
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