Q#3. The following demand for potatoes in the United States was estimated for the year 1959-1973 period. Q = 163.6 – 17.7P, + 9.3 I Where, Q is the annual consumption of potatoes in pounds per person; Px is the average price in dollars per hundred pounds of potatoes; and I is the average income in thousands of 1958 dollars. If we imagine that this year, Px=$7 and I=$2.344, then calculate The sales of potatoes this year b. Compute the elasticity of sales with respect to Px. Is price elasticity of demand for potatoes elastic or inelastic? What would the sales be next year if Px was reduced by 10% and I was increased by 20%? а. с.
Q#3. The following demand for potatoes in the United States was estimated for the year 1959-1973 period. Q = 163.6 – 17.7P, + 9.3 I Where, Q is the annual consumption of potatoes in pounds per person; Px is the average price in dollars per hundred pounds of potatoes; and I is the average income in thousands of 1958 dollars. If we imagine that this year, Px=$7 and I=$2.344, then calculate The sales of potatoes this year b. Compute the elasticity of sales with respect to Px. Is price elasticity of demand for potatoes elastic or inelastic? What would the sales be next year if Px was reduced by 10% and I was increased by 20%? а. с.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter3: Demand Analysis
Section: Chapter Questions
Problem 6E
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Transcribed Image Text:Q#3. The following demand for potatoes in the United States
was estimated for the year 1959-1973 period.
Q = 163.6 – 17.7P, + 9.3 I
Where, Q is the annual consumption of potatoes in pounds per
person; Px is the average price in dollars per hundred pounds of
potatoes; and I is the average income in thousands of 1958
dollars.
If we imagine that this year, Px=$7 and I=$2.344, then calculate
a. The sales of potatoes this year
b. Compute the elasticity of sales with respect to Px. Is price
elasticity of demand for potatoes elastic or inelastic?
c. What would the sales be next year if Px was reduced by
10% and I was increased by 20%?
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