The daily demand for a product X is estimated to be: Q$ = 100 – 3Px+4P,– 0.01M + 2A, %3D Where P = the price of good X P, = the price of arelated goodY Ax = the amount of advertising spent on the good X M = the average income of the consumer. %3D Suppose good X sells at GH¢25, good Y sells at GH¢35, the amount of advertising utilized is 60 units, and the average consumer income is GH¢20,000. Calculate and interpret the own price elasticity, cross price elasticity, income elasticity, and advertising elasticity of demand.

The daily demand for a product X is estimated to be: Q$ = 100 – 3Px+4P,– 0.01M + 2A, %3D Where P = the price of good X P, = the price of arelated goodY Ax = the amount of advertising spent on the good X M = the average income of the consumer. %3D Suppose good X sells at GH¢25, good Y sells at GH¢35, the amount of advertising utilized is 60 units, and the average consumer income is GH¢20,000. Calculate and interpret the own price elasticity, cross price elasticity, income elasticity, and advertising elasticity of demand.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The daily demand for a product X is estimated to be:
Q = 100 – 3P, + 4P, – 0.01M+2A,
= the price of good X
= the price of a related good Y
%3D
Where P
Ax = the amount of advertising spent on the good X
M = the average income of the consumer.
Suppose good X sells at GH¢25, good Y sells at GH¢35, the amount of advertising utilized is 60
units, and the average consumer income is GH¢20,000. Calculate and interpret the own price
elasticity, cross price elasticity, income elasticity, and advertising elasticity of demand.

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