14. Suppose demand is given by Q,' = 50 – 4P, + 6P, + A, where P, = $4, P, = $2, and A, $50. What is the advertising elasticity of demand for good x? А. 1.12 B. 0.38 С. 1.92 D. 0.52
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- Ll.47. Market demand is given as Qd = 750 – 2P. Market supply is given as Qs = 3P - 15. What is the point elasticity of demand at the equilibrium price, and if the firm could change its price, would the firm increase or decrease the price in order to increase total revenue? a. 5.80, the firm will decrease the price b. 0.69, the firm will decrease the price c. 0.69, the firm will increase the price d. 5.80, theIn an attempt to increase revenues and profits, a firm is considering a 4% increase in price, an 11% increase in advertising. If the price elasticity of demand is -1.5 and the advertising elasticity of demand is +0.6, would you expect an increase or decrease in total revenuesSuppose that the management of Sun City resort is trying to understand the income elasticity of their resort. As an advisor, they provide you with the following figures; If the average income of visitors is R3 000 (which is the current income), then 45 000 visitors visit Sun City resort each year and if the average income increases to R5 000, then 60 000 visitors visit Sun City resort each year. Q.2.1.1 Calculate the income elasticity of demand using the arc method. (5) Q.2.1.2 Based on your answer above (Q.2.1.1), explain what type of a product (service) the resort is.
- Suppose that the management of Sun City resort is trying to understand the income elasticity of their resort. As an advisor, they provide you with the following figures;If the average income of visitors is R3 000 (which is the current income), then 45 000 visitors visit Sun City resort each year and if the average income increases to R5 000, then 60 000 visitors visit Sun City resort each year. 1. Calculate the income elasticity of demand using the arc method. (5) 2. Based on your answer above (1), explain what type of a product (service) the resort is.Suppose a firm has the following demand equation: Q(P) = 100 - 30P + 4A Where Q(P) = quantity demanded at the market price P P = product price (in S) A = advertising spending (in $) Assume for the following questions that initial values of P = $2.00 and A = $1.5,000 No 1--- Suppose the firm dropped the price to $2.60. Would this be beneficial. Explain. (Hint: investigating the link between revenue and price elasticity of demand is the best approach -for this question.) No 2--- Supposed the firm raised the price to $5.00 while increasing its advertising expenditure by $200. Would this be beneficial? REQUIRED 2B: a--- Construct the demand schedules (in a table) of Q, P and A (before and after the increase in advertising spending) -using Excel (detailed steps are optional b----Graph the demand curves (before and after the increasing in advertising spending) -using Excel (details of steps are required. no chatgpt or any ai tool and should be in excel with details of formulaAn end-of-aisle price promotion changes the price elasticity of a good from -2 to -3 . Suppose the normal price is$26, revenue with marginal cost at the initial elasticity of -2 . What should the promotional price be when the elasticity changes to -3 ? (Hint: In other words, what price will equatemcost?)$11.70 $15,60 $13.6 $19.50
- With the demand function D(p)=400−3p2, Find the Elasticity function E(p)= Find the Elasticity of Demand at a price of $11 At this price, we would say the demand is: ElasticUnit-elasticInelastic Based on this, to increase revenue we should: Keep Prices UnchangedLower PricesRaise PricesIn an attempt to increase revenues and profits, a firm is considering a 4 percent increase in price and an 11 percent increase in advertising. If the price elasticity of demand is −1.5 and the advertising elasticity of demand is +0.6, would you expect an increase or decrease in total revenues?Assume that you are in an interview session and the panel asks you to give a pricing decision that will maximize company’s interest (revenue maximization). Price Qd Qs 10 80 20 11 75 30 12 70 40 13 65 50 14 60 60 15 55 70 16 50 80 This is demand and supply schedule, estimate the equations, calculate the elasticity, and justify your positions based on your calculations. Based on your demand equation, what price will maximize the revenue and what would be the elasticity at the revenue maximization point.
- An end-of-aisle price promotion changes the price elasticity of a good from −4 to −5. Suppose the normal price is $48, which equates marginal revenue with marginal cost at the initial elasticity of –4. What should the promotional price be when the elasticity changes to –5? (Hint: In other words, what price will equate marginal revenue and marginal cost?) a. $27.00 b. $45.00 c. $36.00 d. $31.50In a statement to Gillette’s shareholders, its CEO indicated, “Despite several new product launches, Gillette’s advertising-to-sales declined dramatically . . . to 7.5 percent last year. Gillette’s advertising spending, in fact, is one of the lowest in our peer group of consumer product companies.” If the elasticity of demand for Gillette’s consumer products is similar to that of other firms in its peer group (which averages –4), what is Gillette’s advertising elasticity? Is Gillette’s demand more or less responsive to advertising than other firms in its peer group? Explain. UT Sports, a store that sells various types of sports clothing and other sports items, is planning to introduce a new design of World Cup Kits. A consultant has estimated the demand curve to be Q= 8400 – 420 P Where Q is cap sales and P is price. How many KITs could UT sell at $25.2 each? How much would the price have to be to sell 7,560 KITs? Suppose UT were to use the KITs as a promotion. How many KITs could UT give away free? At what price would no KITs be sold? Calculate the point price elasticity of demand at a price of $ 25.2.
