Question

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 happen to the firm’s revenue if it decided to charge a price above $125

c. What is the cross-price elasticity of demand between good X and good Z when Px = $125? What about when Px = $200? Are goods X and Z substitutes or complements?

Answer #1

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...

Assume that the demand for product X is represented by the
following equation: QDX =35–5PX +1.6PY +0.88PZ +3I
What is the relationship (complements or substitutes) between
products Y and Z and X
X and Y _________________________
X and Z _________________________

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...

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...

Given the following demand function Qdx=
500-0.5Px+2Py+5Pz+0.1M and that
Py= $300, Pz= $100 and M= $50,000, answer the
following questions.
2.1 Indicate whether good Y and Z are substitutes or complements
for good X.
2..2 Is X an inferior or normal good?
2.3 Determine the demand and inverse demand functions for X.
Graph the inverse demand function for X.

Assume that the demand for a product X is:
Qdx = 4,500 – 0.5Px +
Py – 6Pz + 0.05M,
where Px is unit price of product X,
Py is unit price of product Y,
Pz is unit price of product Z, and
M is average income of consumers of product X.
Determine the size of the consumer surplus at $10,500 per unit
price of X. Clearly show your steps and manual calculations.
Py = $4,760
Pz = $85
M...

Given the following supply and demand functions:
Qdx = 1,800 - 4 Px + 0.3 Py - 0.3 Pz + 0.006 I
Qsx = 450 + 16 Px - 7 W - 0.2 R
Income (I) = 4,200
Price of Y (Py) = 190
Price of Z (Pz) = 80
Wages (W) = 20
Rent (R) = 180
1. What is the equilibrium price?
2. What is the equilibrium quantity?
In reduced form the demand is Qdx = Do -...

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?

The demand function for a product
is QdX = 1000 – 10
Px and its supply function is
QsX = 100 + 2
Px
Calculate the equilibrium price and equilibrium quantity of the
good.
a.
75; 250
b.
90; 100
c.
70; 200
d.
100; 100
If the value of the price elasticity of X is 0.45, then a price
decrease of X will
a.
decrease revenues for the suppliers of X
b.
increase revenues for the suppliers of X
c.
will...

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 ∗ =...

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