Question

Suppose demand is given Qxd = 50 - 4 Px + 6Py + Ax, where Px =$4, Py =$2 and Ax = 50.

(a) What is the quantity demanded of good X? Please show your calculations.

(b) what is the own price elasticity of demand (point elasticity) when Px = $4? Is demand elastic or inelastic at this price? Please explain.

(c) What is the cross price elasticity of demand between good X and good Y when Px = $4 (point elasticity)? Are goods X and Y substitutes or complements? Please explain.

Answer #1

Suppose demand is given by Q xd = 50 −
4Px + 6Py + Ax,
where Px = $4, Py = $2, and Ax
= $50.
(a) What is the quantity demanded of good x? Please show your
calculations.
(b) What is the own price elasticity of demand (point elasticity)
when PX = $4? Is demand elastic
or inelastic at this price? Please explain.
(c) What is the cross price elasticity of demand between good X
and good Y when...

The market demand for commodity X is given by:
QXD = 2,000 – 0.5PX1/2 + 8PY1/2 – 5I + AX + 2.5POP,
where QXD is the quantity demanded for X, PX is the price of X,
PY is the price of Y, I is income, AX is advertising expenditures
on X, and POP is population. Suppose we know that PX is 100, PY is
50, I is 100, AX is 20, and POP is 40.
Calculate the own-price demand elasticity....

Assume that the estimated demand function for a product X
is:
ln Qxd = 9 –
1.25 ln Px + 3.5 ln Py + 0.85 ln M + ln A
where Qxd is quantity demanded of product
X,
Px is unit price of product
X = $21,
Py is unit price of another
product Y = $7.50,
M is average income of consumers of
product X = $52,500, and
A is advertisement cost for product X
= $425.
A. Clearly...

1- The demand for
good X is estimated to be Qxd = 10,000 −
4PX + 5PY + 2M + AX where
PX is the price of X, PY is the price of good
Y, M is income, and AX is the amount of advertising on
X. Suppose the present price of good X is $50, PY =
$100, M = $25,000, and AX = 1,000 units. What is the
quantity demanded of good X?
Multiple Choice
61,500
61,300
61,300...

Suppose the demand function for ice cream (good X) is given by
Qx^d= 1200-5Px-0.08Pz+0.04M+3A where Px =$40, Px=$100, M=3000, A=
700, Z is a related good, M is income and A is the level of
advertising. •determine the own price elasticity, and whether the
demand is elastic, inelastic, or unitary elastic? What should
managers do to increase their profits? • determine the cross price
elasticity between good X and good Z and state whether they are
substitutes, or complements and...

The demand for good X is given by QXd = 6,000 - (1/2)PX - PY +
9PZ + (1/10)M Research shows that the prices of related goods are
given by Py = $6,500 and Pz = $100, while the average income of
individuals consuming this product is M = $70,000. a. Indicate
whether goods Y and Z are substitutes or complements for good
X.

Suppose the demand for good x is ln Qxd =21−0.8 ln Px −1.6 ln Py
+6.2 ln M+0.4 ln Ax.Then what can we say about goods x and y in
terms of whether they are substitutes or complements?

The demand curve for a product is given Qdx = 1500 − 5Px − 0.2Pz
by where
Pz = $300.
a. What is the own price elasticity of demand when Px = $200? Is
demand elastic or inelastic at this price? What would happen to the
firm’s revenue if it decided to charge a price below $200?
b. What is the own price elasticity of demand when Px = $125? Is
demand elastic or inelastic at this price? What would...

Question 6 The demand for good x is given by x ∗ = 60 − 4Px + 2M
+ Py, where Px is the price of good x, Py is the price of good y,
and M is income. Find the own-price elasticity of demand for good x
when Px = 20, Py = 20, and M = 100. Is x an ordinary or giffen
good? Explain.
Question 7 The demand for good x is given by x ∗ =...

Suppose that the demand function for good x is given by
x = 10 - 2px + py + 0.5M, where
M=10 is income and px = 2 and py =
5.
(a) Calculate the own price elasticity of demand.
(b) Calculate the cross price elasticity of demand. Are the
goods substitutes or complements?
(c) Is the good normal or inferior? Calculate the income
elasticity of demand.
(d) Is the good a necessity or a luxury?

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