Demand for Orange Juice is given as Qd = 5000 – 2500 P + 1200 I + 650 E – 255 Ps Suppose Income is I = Rs.500, Expectations E = 55, and Price of Ps = Rs 25. Find the Demand Equation. Using the demand function from part a., Calculate Elasticity of Demand for price range of Rs.125 and Rs.155. C.What will be the ‘Price Elasticity of Demand’ at P = Rs.125?
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Qd = 5000 – 2500 P + 1200 I + 650 E – 255 Ps
Suppose Income is I = Rs.500, Expectations E = 55, and Price of Ps = Rs 25.
- Find the Demand Equation.
- Using the demand function from part a.,
Calculate Elasticity of Demand for price range of Rs.125 and Rs.155.
C.What will be the ‘Price Elasticity of Demand’ at P = Rs.125?
D.Interpret the Elasticity of Demand calculated in (C) above
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- The British Automobile Company is introducing a brand new model called the "London Special." Using the latest forecasting techniques, BAC economists have developed the following demand function for the "London Special": QD = 1,200,000 - 40P a) What is the point price elasticity of demand at prices of (a) $8,000 and (b) $10,000? b) Is it Elastic, Unit Elastic or Inelastic, Explain why?Harding Enterprises has developed a new product called the “Quest Simulator (QS)”. The market demand for this product is given as follows: Q = 240 - 4P. If QS is priced at $40, what is the point price elasticity of demand? Is demand elastic or inelastic? What is the maximum amount that consumers are willing to pay for the quantity demanded at the price of $40? (hint: it includes both the total expenditures and the consumer surplus) If the price of QS is increased slightly from $40, what will happen to the total expenditure on the product? What will happen to the consumer surplus? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.According to studies undertaken by the U.S. department of agriculture, the price elasticity of demand for cigarettes is about +0.5. Suppose a major brokerage firm advised its clients to buy cigarette stock under the assumption that, if consumer income rise by 50 percent as expected over the next decade, cigarette sales would double. Based on the fundamental economic principles on income elasticity of demand, a reasonable reaction to this investment advice would be?
- The monthly supply of desktop personal computers is given by the equation QS = 15,000 + 43.75P. At a price of $800, what is the price elasticity of supply? B) The British Automobile Company is introducing a brand new model called the "London Special." Using the latest forecasting techniques, BAC economists have developed the following demand function for the "London Special": QD = 1,200,000 - 40PConsider the following linear demand function where QD = quantity demanded, P = selling price, and Y = disposable income: QD = -36 - 2.1P + .24Y. The coefficient of Y (i.e., .24) indicates that (all other things being held constant): * for a one percent increase in disposable income, quantity demanded would increase by 0.24 percent for a one unit increase in disposable income, quantity demanded would increase by 2.1 units for a one percent increase in disposable income, quantity demanded would decline by 2.1 percent for a one percent increase in disposable income, quantity demanded would decline by 0.24 percentDemand in each period follows the same normal distribution (i.e., there is one demanddistribution that represents demand in any single period). Assuming demand is independent across periods, which of the following statements about the standard deviation ofdemand over five periods is true? a. It equals the standard deviation of demand over one period.b. It is greater than the standard deviation of demand over one period but less than fivetimes the standard deviation of demand over one period.c. It equals five times the standard deviation of demand over one period.d. It is even more than five times the standard deviation of demand over one period.
- Expectations of higher future prices cause firms to lower prices today to sell their product before prices rise? True or false(A) The monthly supply of desktop personal computers is given by the equation QS = 15,000 + 43.75P. At a price of $800, what is the price elasticity of supply? Q 2. (B) The British Automobile Company is introducing a brand new model called the "London Special." Using the latest forecasting techniques, BAC economists have developed the following demand function for the "London Special": QD = 1,200,000 - 40P a) What is the point price elasticity of demand at prices of (a) $8,000 and (b) $10,000? b) Is it Elastic, Unit Elastic or Inelastic, Explain why? (A) Phoenix Lumber Company uses the number of construction permits issued to help estimate demand (sales). The firm collected the following data on annual sales and number of construction permits issued in its market area: No. of Construction Sales Year Permits Issued (000) (1,000,000) 2003 6.50 10.30 2004 6.20 10.10 2005 6.60 10.50 2006 7.30 10.80 2007 7.80 11.20 2008 8.20 11.40 2009 8.30 11.30…Suppose a firm has estimated the price elasticities of demand for the two goods it offers in its store (good Y and Z). The price elasticities of demand for good Y and Z are 0.5 and 2.5 respectively. How would you characterize the two goods in terms of consumer’s preferences? Which one of them would face higher demand during economic recession?
- Demand and Supply are represented by the functions below: QD = 8250 – 325P QS = 850 + 175P Exercise: 1. Compute quantity and price in equilibrium. Determine what would happen if the price changed to 12$ 2. Plot the graph representing the above cases. 3. Compute the elasticity of both curves assuming the price would increase from 22$ to 24$. 5. Plot the graph for question 3.Goals of data analysis Consider the following scenario. An economist seeks to estimate the magnitude of the price elasticity of demand of alcohol, which economic theory asserts is negative. This scenario most closely aligns with which of the following goals of data analysis? Quantifying relationships Describing the economy Testing hypotheses Predicting the futureOther things the same, when the price level rises more than expected, some firms will have a. higher than desired prices, which increases their sales. b. higher than desired prices, which depresses their sales. c. lower than desired prices, which increases their sales. d. lower than desired prices, which depresses their sales.