Question

QUESTION 2 (CLO1) (10 MARKS) Company X is a major producer of steel. The company’s demand...

QUESTION 2 (CLO1)

Company X is a major producer of steel. The company’s demand has been estimated as follows:

QD = 5000 – 1000Ps + 0.1Y + 100Pa   

where QD is steel demand (thousands of tons per year), Ps is the price of steel (in $ per pound), Y is income per capita (in $ per year), and Pa is the price of aluminum (in $ per pound). Initially the price of steel is $1 per pound, income per capita is $20 000 per year, and the price of aluminum is $0.80 per pound.

(a)            How much steel will be demanded at these initial prices and income?

(b)            What is the company’s point price elasticity?

(c)            What is the company’s point income elasticity?

(d)            What is the company’s point cross elasticity?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
So, suppose the elasticity of demand for jelly beans is QD= 7 - 3p + 0.7ps–...
So, suppose the elasticity of demand for jelly beans is QD= 7 - 3p + 0.7ps– 1.4pP+ 0.00005Y QD is the quantity of jelly beans demanded (‘000 in kilograms per person) p is the price of jelly beans ($/kg) pS is the price of lollipops ($/kg) pP is the price of candy hearts ($/kg) Y is the per capita income ($) Suppose p=$1.5/kg, pS=$1.20/kg and pP=$0.6/kg and Y=$25,000, 1. Calculate and interpret the own-price elasticity of demand 2. Calculate and...
Calculate the price and cross-price elasticities of demand for coconut oil. The coconut oil demand function...
Calculate the price and cross-price elasticities of demand for coconut oil. The coconut oil demand function (Buschena and Perloff, 1991) is Q = 1,200 − 9.5p + 16.2pp + 0.2Y, where Q is the quantity of coconut oil demanded in thousands of metric tons per year, p is the price of coconut oil in cents per pound, pp is the price of palm oil in cents per pound, and Y is the income of consumers. Assume that p is initially...
The demand for pizza in a large town is written as: Qd = 26 - 10P...
The demand for pizza in a large town is written as: Qd = 26 - 10P + 5Pb - Ps + 10Y, where Qd is the quantity demanded, P is the price of pizza, Pb is the price of burittos, Ps is the price of soft drinks sold in the pizza restaurants, and Y is personal income per month (in thousand dollars). Suppose Pb = $4; Ps = $1 and Y = 3 (in thousand dollars) The supply of pizza...
Determine the price elasticity of demand, the cross-price elasticity of demand or the income elasticity in...
Determine the price elasticity of demand, the cross-price elasticity of demand or the income elasticity in the following scenarios. a. Consider the market for coffee. Suppose the price rises from $4 to $6 and quantity demanded falls from 120 to 80. What is price elasticity of demand? Is coffee elastic or inelastic? b. John’s income rises from $20,000 to $22,000 and the quantity of hamburger he buys each week falls from 2 pounds to 1 pound. What is his income...
Problem:       Suppose that the demand for Cod Liver Oil (CLO) can be written QD =5000-2P...
Problem:       Suppose that the demand for Cod Liver Oil (CLO) can be written QD =5000-2P (so, the inverse demand curve for CLO is P=2500-0.5QD), where P is the price per ton (in dollars) of CLO and QD is the quantity demanded (in tons) in a period. Use Excel Scatterplots to draw (i) the demand curve and (ii) the corresponding total revenue curve for this market (in two separate diagrams). Calculate price elasticity of demand (using the point elasticity formula)...
The demand and supply for Fuji apples are given by QD = 17,500 - 25 P...
The demand and supply for Fuji apples are given by QD = 17,500 - 25 P and QS = 10 P, where P is price per pound and Q is pounds of apples. What is the consumer surplus and producer surplus at the equilibrium? A. CS = $500,000; PS = $1,250,000 B. CS = $750,000; PS = $1,250,000 C. CS = $500,000; PS = $750,000 D. CS = $1,250,000; PS = $500,000 The market for plywood is characterized by the...
2. Given a demand equation for goods X: ?? = 50 − 0.4?? + 0.02? +...
2. Given a demand equation for goods X: ?? = 50 − 0.4?? + 0.02? + 0.1?? a. How much is the quantity demanded if price of goods x (PX) is RM50, income (Y) RM6000 and price of goods z (Pz) is RM60? b. Calculate price elasticity of demand for good x when its price is RM50. Is the demand for good x sensitive to the change in its price? c. Determine the cross elasticity of demand for good x...
The demand for mysterious good X in Lansing is Q = 12 ? P, where P...
The demand for mysterious good X in Lansing is Q = 12 ? P, where P is the price of good X per pound and Q is the quantity demanded in pounds. The marginal cost of producing the good is $2 per pound. There is no fixed cost of producing the good. There is only one firm, Alice, who can produce the good. Alice cannot price discriminate against any consumer. (a) What is the marginal revenue curve? (b) What is...
- DHL Company specializes in rapid parcel delivery. Cross sectional data from DHL’s regional hub in...
- DHL Company specializes in rapid parcel delivery. Cross sectional data from DHL’s regional hub in Palestine were used to estimate the demand equation for the company’s services. Holding income and prices of other goods constant, the demand equation is estimated to be P = 66Q -1 /3 where P is the price per pound and Q is pounds delivered. The marginal cost of delivery is constant and equal to $2 per pound. a. What is the point-price elasticity of...
1) A firm’s demand equation is given by: Qd = 60 – 60P + 2Y, where...
1) A firm’s demand equation is given by: Qd = 60 – 60P + 2Y, where Qd is quantity, P is price, and Y is income. If price increases by $2 and income increases by $80, then quantity demanded will: Answers: increase by 160 units. increase by 80 units. decrease by 120 units. increase by 40 units. decrease by 60 units. 2) The demand function for pork is Qd = 300 – 100P + 0.01INCOME where Qd is the tons...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT