Initial values are: PM = $20000 PG = $1.00 I = $15000 A = $10000 This function is: QT = 200 -.01PT +.005PM -10PG +.01I +.003A please Answer from 4 to 5 complete 4.(a). Competition might be a worry for Toyota. PM = the price of Mazadas. Calculate the point Mazada cross-priceelasticity of demand with PM = $20000 and PT = $20000 (which should make Qr=270). Other variables are givenat the top before question #1. The formula is:aQT PmETM apm QT(b). Does this elasticity indicate that the demand for Toyotas is relatively responsive to changes in the price ofMazadas? Explain why or why not.5.(a). Calculate the point advertising elasticity of demand for advertising expenditures (A) = $10000 also with PT=$10000 (which should make Q₁-370). Other variables and their values are given at the top, before question #1. Theformula is:EA=aQT ADA LT(b). Does this elasticity indicate that demand for Toyotas is very responsive to changes in advertising expenditures (thussuggesting that advertising is a very important way to increase sales)? Explain why or why not.

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Answered: 4.(a). Competition might be a worry for…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 6PA: Suppose that your demand schedule for DVDs is as follows: Price Quantity Demanded (income = 10,000)...

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Initial values are: P_M = $20000 P_G = $1.00 I = $15000 A = $10000

This function is: Q_T = 200 -.01P_T +.005P_M -10P_G +.01I +.003A

please Answer from 4 to 5 complete

4.(a). Competition might be a worry for Toyota. PM = the price of Mazadas. Calculate the point Mazada cross-price
elasticity of demand with PM = $20000 and PT = $20000 (which should make Qr=270). Other variables are given
at the top before question #1. The formula is:
aQT Pm
ETM apm QT
(b). Does this elasticity indicate that the demand for Toyotas is relatively responsive to changes in the price of
Mazadas? Explain why or why not.
5.(a). Calculate the point advertising elasticity of demand for advertising expenditures (A) = $10000 also with PT=
$10000 (which should make Q₁-370). Other variables and their values are given at the top, before question #1. The
formula is:
EA
=
aQT A
DA LT
(b). Does this elasticity indicate that demand for Toyotas is very responsive to changes in advertising expenditures (thus
suggesting that advertising is a very important way to increase sales)? Explain why or why not.

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5.(a). Calculate the point advertising elasticity of demand for advertising expenditures (A) = $10000 also with P_T= $10000 (which should make Q_T= 370). Other variables and their values are given at the top, before question #1. The formula is:

(b). Does this elasticity indicate that demand for Toyotas is very responsive to changes in advertising expenditures (thus suggesting that advertising is a very important way to increase sales)? Explain why or why not.

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