Question

Assume that the estimated demand function for a product X is:

ln Q_{x}^{d} = 9 –
1.25 ln P_{x} + 3.5 ln P_{y} + 0.85 ln M + ln A

where Q_{x}^{d} is quantity demanded of product
X,

P_{x} is unit price of product
X = $21,

P_{y} 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 show your steps and determine the own-price elasticity of demand for product X. Explain whether demand for product X is elastic, inelastic, or unitary.

B. Clearly show your steps and determine the cross-price elasticity of demand between products X and Y. Explain the relationship (substitutes or complements) between the products.

C. Write the nonlinear functional form (equation) of the estimated demand function for product X. Clearly show your steps.

D. Determine the quantity demanded of product X at the stated levels of the independent variables. Clearly show your steps and manual (hand and calculator) calculations.

Answer #1

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...

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....

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...

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...

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?

Suppose the demand function for good X is estimated to be Qdx =
1000 – 25Px + 10Py + 100M, where Qdx is quantity demanded of X, Px
is the price of good X, Py is price of some other good Y, and M is
the average income of consumers. By examining this function, we can
say good X has a downward sloping demand curve, is a substitute
with good Y, and is a normal good.

Suppose the demand function for good X is estimated to be Qdx =
1000 – 25Px + 10Py + 100M, where Qdx is quantity demanded of X, Px
is the price of good X, Py is price of some other good Y, and M is
the average income of consumers. By examining this function, we can
say good X has a downward sloping demand curve, is a substitute
with good Y, and is a normal good.

. You have computer a market demand curve for X and it looks
like this: QXd = 30,000 -20PX - 8PY + 0.5M where PX is the price of
X PY is the price of a related good Y M is the income of the buyers
in the market. What can you say about the demand from good X from
this demand curve?
Given the above demand curve, how many of good X will consumer
purchase when PX is $100...

The demand function for your brand X shirts is estimated as Qd x
= 1,000 - 5 Px - 10 Py + 9 PZ+ 0 .001 I The price of X is $ 10, Y
is $ 4, Z is $ 10 and incomes are $ 20,000.
1) What are your sales? ______________ 2) What is the elasticity
of demand for X? _______________ 3) What is the cross elasticity
between X and Y? ______________ 4) Are X and Y substitutes...

The demand function
for your brand X shirts is estimated as
Qd
x = 1,000 - 5 Px
- 10
Py
+ 9
PZ+
0 .001 I
The price of X is $
10, Y is $ 4, Z is $ 10 and incomes are $
20,000.
1) What are your
sales? ______________
2) What is the
elasticity of demand for X? _______________
3) What is the
cross elasticity between X and Z?
______________
4) Are X...

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