Using a linear specification, you estimate your demand curve to equal Q=10-5P+20C+2A, where • Q = the quantity demanded of your product • P = the price of your product • C = college-ratio, which is the percentage of the local population that attends college. For instance, C=0.10 would indicate 10% of the local population attends a college. • A = digital advertising spend (in thousands of dollars) What is your demand elasticity with respect to the college-ratio when your price is $5, your digital advertising spend is $100,000 (i.e. A=100), and the college-ratio equals 0.25? a. εQ,C=0.0013 b. εQ,C=0.0263 c. εQ,C=20 d. εQ,C=15200
Using a linear specification, you estimate your demand curve to equal Q=10-5P+20C+2A, where • Q = the quantity demanded of your product • P = the price of your product • C = college-ratio, which is the percentage of the local population that attends college. For instance, C=0.10 would indicate 10% of the local population attends a college. • A = digital advertising spend (in thousands of dollars) What is your demand elasticity with respect to the college-ratio when your price is $5, your digital advertising spend is $100,000 (i.e. A=100), and the college-ratio equals 0.25? a. εQ,C=0.0013 b. εQ,C=0.0263 c. εQ,C=20 d. εQ,C=15200
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Using a linear specification, you estimate your demand curve to equal Q=10-5P+20C+2A, where
• Q = the quantity demanded of your product
• P = the price of your product
• C = college-ratio, which is the percentage of the local population that attends college.
For instance, C=0.10 would indicate 10% of the local population attends a college.
• A = digital advertising spend (in thousands of dollars)
What is your demand elasticity with respect to the college-ratio when your price is $5, your digital advertising spend is $100,000 (i.e. A=100), and the college-ratio equals 0.25?
a. εQ,C=0.0013 b. εQ,C=0.0263 c. εQ,C=20
d. εQ,C=15200
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