3. Assume equations 1 and 2 below were estimated from the data gathered that will represent the demand and supply functions respectively of an individual buyer and seller respectively for product X. Eq. 1 Eq. 2 Qdx = 65,000 – 11.25Px + 15P, – 3.751 +7.5A Qsx = 7,500 + 14.25Pg – 15P, – 3.75C
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- 1. Consider a demand of the form QD = 2P + 16 and a supply curve of the form Qs = P 5. Plot these curves and be sure to P on the vertical and Q on the horizontal axis. Find the equilibrium price and quantity. 2.Consider the function Y = pXZ where X > 0 and Z > 0. Draw the contour lines (in the positive quadrant) for this function for Y = 4, Y = 5, and Y = 10. What do we call the shape of these contour lines? Where does the line 20X + 10Z = 200 intersect with the contour lineY = 50?Px = 666 -0.5Qx - 2Qy Py = 484.5 -1.5Qy - 0.25Qx MCx = 20 +2Qx MCy = 4 + Qy What are the profit-maximizing prices for the two goods? 1). Px = $375, Py = $284 2). Px = $423, Py = $712 3). Px = $166, Py = 324 4). Px = 481, Py = 588 [ i will upvotes 5]Please no written by hand solution Instead of assuming a linear demand curve, suppose we assume that demand is char- acterized by the following demand function qD = 13.572P −1.5 (a) Suppose the current price is $5. What is the price elasticity of demand at this price? (b) Over what range of prices is demand elastic? Inelastic? Unit elastic?
- The following relations describe monthly demand and supply for a computer support service to small businesses: Qd=3000-10P Qs=-1000+10P whrer Q is the number of businesses that need services and P is the monthly fee, in dollars. a. at what average monthly fee would demand equal zero? b. at what average monthly fee would supply equal zero? c. plot the supply and demand curves. d. what is the equilibrium price/output level? e. Suppose demand increases and leads to a new demand curve: Qd = 3500 - 10P f. Suppose new suppliers enter the market due to the increase in demand so the new suply curve is Q=-500+10P. What are the new equilibrium price and equilibrium quantity? g. Show changes on the graph.2. Suppose your marketing research department estimates the demand for your company’s product as Qx= 500-11Px+0.5Y, where Qx is the quantity demanded per week, Px is the price of product X, and Y is the average household income per week in the city. R2=0.87, the standard error of the coefficients of the price (Px) and household weekly income (Y) are 2 and 0.1, respectively. a. Are the coefficients of Px and Y statistically significant? b. Given the initial values Px=$10 and Y=$1000, find price elasticity (Ep) and income elasticity(EY), respectively. Is the demand for the company’s product price and income elastic, or inelastic? c. What action should the manager take to increase the company’s operating revenue? d. Is the company’s product a normal good? How do you know? e. Interpret what R2=0.87 meansQuestions 1-17 refer to below statement and demand and supply functions. Suppose that demand and supply curves for avocado in Brooklyn are as the followings: Qd = 144 − 24P Qs = -36 + 12P where Qd and Qs are quantities demanded and supplied in tons respectively, and P is the price of avocado in dollars per kg? 1) If price elasticity of demand for avocado at price P* is equal to -2/3, how much is P*? a) $2.00 b) $2.20 c) $2.40 d) $2.60 e) $2.80 2) What is quantity demanded at price P* at which price elasticity of demand for avocado equals -2/3? a) 82.2 tons b) 83.2 tons c) 84.4 tons d) 85.2 tons e) 86.4 tons 3) If price elasticity of supply for avocado at price P* is equal to 2.5, how much is P*? a) $2 b) $3 c) $4 d) $5 e) $6 4) What is quantity supplied at price P* at which price elasticity of supply for avocado equals 2.5? a) 6 tons b) 12 tons c) 18 tons d) 24 tons e) 30 tons 5) What is market clearing equilibrium price and quantity in Brooklyn avocado market? a) $3; 20…
- The estimated monthly sales of Mona Lisa paint-by-number sets is given by the formula q = 95ep − 3p2⁄2, where q is the demand in monthly sales and p is the retail price in hundreds of yen. (a)Determine the price elasticity of demand E when the retail price is set at ¥300. E = Interpret your answer. The demand is going by % per 1% increase in price at that price level. Thus, a large price ___ is advised. (b)At what price will revenue be a maximum? (Round your answer to the nearest integer.) yen (c)Approximately how many paint-by-number sets will be sold per month at the price in part (b)? (Round your answer to the nearest integer.) paint-by-number sets per month**Answer bolded questions only please** The following relations describe monthly demand and supply for a computer support service to small businesses: Qd=3000-10P Qs=-1000+10P whrer Q is the number of businesses that need services and P is the monthly fee, in dollars. a. The average monthly fee where demand equal zero. $300 b. The average monthly fee where supply equal zero. $100 d. what is the equilibrium price/output level? e. Suppose demand increases and leads to a new demand curve: Qd = 3500 - 10P f. Suppose new suppliers enter the market due to the increase in demand so the new suply curve is Q=-500+10P. What are the new equilibrium price and equilibrium quantity? g. Show changes on the graph.Suppose that the supply and demand schedules for a local electric utility are as follows:Price 17 16 15 14 13 12 11Quantity supplied 9 7 5 3 1 - -Quantity demanded 3 4 5 6 7 8 9The price is in cents per kilowatt hour (kWh), and the quantity is millions of kilowatt hours. The utilitydoes not operate at prices less than 13 cents per kWh.(a) Using graph paper and a ruler, or a computer spreadsheet or presentation program, carefully graphand label the supply curve for electricity.(b) On the same graph, draw and label the demand curve for electricity.(c) What is the equilibrium price of electricity? The equilibrium quantity? Label this point on yourgraph.(d) At a price of 17 cents per kWh, what is the quantity supplied? What is the quantity demanded? Whatis the relationship between quantity supplied and quantity demanded? What term do economists useto describe this situation?(e) At a price of 14 cents per kWh, what is the relationship between quantity supplied and quantitydemanded? What…
- true or false with reasoning. 1) ______In general, the larger the proportion of consumer’s income spent on a product, the smaller is price elasticity of demand 2) -----if a supply curve is linear and it intersects the price axis, the curve is elastic. Support your answer mathematically. Hint: write an equation of a supply curve that intersects the price axis in the general form and go from there. 3) ______Restaurants might offer a free drink with a purchase an appetizer because of the relatively low elasticity of demand in their industry.The following estimates have been obtained for the market demand for cereal In Q= 9.01- 0.68 In P+0.75In A-1.3M, where Q is the quantity of cereal,P is the price of cereal,A is the level of adverstising, and M is income. Based on this information,determine the effect on the consumption of cereal of : a: A 5 percent reduction in the price of cereal. b: A 4 percent increase in income. c: A 20 percent reduction in cereal advertising.3.8. What do you understand by the term ‘customer price sensitivity’? What does it mean when customers are ‘price sensitive’? 3.9. Which communication of price (1 or 2) is more effective in terms of reducing customers’price sensitivity if they are interested in the menu ‘Cheese & tomato with mushrooms andpepperoni’? Why? 3.10. In communication 1, the seller communicates three price points. In terms of ‘reference price’concept, why is it better to communicate 3 price points rather than just 2 price points?3.11. If the restaurant manager decides to bundle pizza and a fizzy drink together for a cheaper price than buying separately, which mechanism for segmented pricing is the restaurant using?Explain your reasoning. 3.12. If the restaurant gives 30% discount for the second tray of pizza bought, which mechanism for segmented pricing is the restaurant using? Explain your reasoning. 3.13. Should the firm give regular discount of 10% every Monday to attract customers? Give your…