The demand for a good is QD = 19 – 2P + 4l where P and I represent price and income respectively. At price of P=1 and income l=32, determine what type of good this is (inferior, necessity, or luxury) by calculating the income elasticity of demand.
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- using picture attached Over the range from $20 to $18, Qd goes from 12 to 17. Using this range of prices and quantities, you should calculate the coefficient of price elasticity of demand. In the box labeled H1, the coefficient of price elasticity of demand is: 3.28 5 3.01 2.97 In box H2, you would interpret the coefficient calculated in the previous question. Therefore, you would characterize this range as: Elastic Unit Elastic Inelastic None of the Above Using the dataset above, if prices increased from $8 to $10, then Total Revenue will: Increase Decrease None of the aboveAllegiant Airlines is considering an overbooking policy for one of its flights. The airplane has 50 seats, but Allegiant is considering accepting more reservations than seats because sometimes passengers do not show up for their flights, resulting in empty seats. The PassengerAppearance worksheet in the file Overbooking contains data on 1,000 passengers showing whether or not they showed up for their respective flights. In addition, Allegiant has conducted a field experiment to gauge the demand for reservations for the current flight. During this experiment, they did not limit the number of reservations for the flight to observe the uncensored demand. The following table summarizes the result of the field experiment. No. of Reservations Demanded Probability 48 0.05 49 0.05 50 0.15 51 0.30 52 0.25 53 0.10 54 0.10 Suppose Allegiant receives a marginal profit of $108 for each passenger who books a reservation (regardless of whether they show up). In addition, suppose…Recently, Verizon Wireless ran a pricing trial in order to estimate the elasticity of demand for its services. The manager selected three states that were representative of its entire service area and increased prices by 5 percent to customers in those areas. One week later, the number of customers enrolled in Verizon’s cellular plans declined 4 percent in those states, while enrollments in states where prices were not increased remained flat. The manager used this information to estimate the own price elasticity of demand and, based on her findings, immediately increased prices in all market areas by 5 percent in an attempt to boost the company’s 2012 annual revenues. One year later, the manager was perplexed because Verizon’s 2012 annual revenues were 10 percent lower than those in 2011—the price increase apparently led to a reduction in the company’s revenues. Did the manager make an error? Explain
- Please Explain in details If chocolate bars have a price elasticity of 0.6, then we can infer the chocolate bar Multiple Choice has many substitutes and sellers could raise price to increase revenue from sales. is a luxury good and sellers could raise price to increase revenue. is a necessity and sellers could raise price to increase revenue. has few substitutes and sellers could lower price to increase revenue from salesSetting: U.S. Auto manufacturers are trying to develop a multivariate function with which to estimate the demand for their gas-electric hybrid compact cars. Here is one that Motors General developed for its Jolt: Qj = 65000 – 20Pj + 20Pf + 35Pt – 5Pb + 0.2Tc + 0.05Y + 10Mg + 0.04A Where Qj = the number of Jolts demanded per week. Pj = the price of each new Jolt (in $). Pf = the price of each new Ford gas-electric hybrid (in $). Pt = the price of each new Toyota gas-electric hybrid (in $). Pb = the price of replacement batteries for the Jolt (in $). Tc = the amount of tax credit incentive offered with the purchase of a new hybrid (in $). Y = average weekly disposable income of a typical Jolt purchaser (in $). Mg = the miles per gallon of gas rating of the Jolt (in miles per gallon). A = average weekly Jolt advertising expenditure (in $). 6 If all variables remain unchanged except that the price of the Toyota hybrid (Pt) decreases by $500, then the demand for Jolts will: 7…Explain whether the empirical evidence supports the claim that “investors are solely concerned with mean and variance”
- Suppose that News Corp., which controls the United States’ largest satellite-to-TV broadcaster, is contemplating launching a Spaceway satellite that could provide high speed Internet service. Prior to launching the Spaceway satellite, suppose that News Corp. used least squares to estimate the regression line of demand for satellite Internet services. The best-fitting results indicate that demand is Qdsat = 152.5 - 0.8Psat + 1.2PDSL + 0.5Pcable (in thousands), where Psat is the price of satellite Internet service, PDSL is the price of DSL Internet service, and Pcable is the price of high-speed cable Internet service.Suppose that after the FCC’s ruling the price of DSL, PDSL, is $25 per month and the monthly price of high-speed cable Internet, Pcable, is $50. Furthermore, News Corp. has identified that its monthly revenues need to be at least $15 million to cover its monthly costs. If News Corp. set its monthly subscription price for satellite Internet service at $55, how much revenue…The daily demand for Invigorated PED shoes is estimated to be Qdx = 100−3Px + 4Py − .01M + 2Ax where Ax represents the amount of advertising spent on shoes (X), Px is the price of good X, Py is the price of good Y, and M is average income. Suppose good X sells at $25 a pair, good Y sells at $35, the company utilizes 50 units of advertising, and average consumer income is $20,000. Calculate and interpret the own price, cross-price, and income elasticities of demand.Please solve questions 15, 16 and 17. The multivariate demand function below will be needed for questions 12-18. Setting: Grapple, Inc. is a leading seller of laptop personal computers. However, they want to become a leading tablet seller, too. Your marketing department, aided by your economics staff, has estimated a function to help you in the quest for market leader in tablets. The variables are defined after the function. Qg = 10000 - 25Pg + 20Ph + 30Pr - 15dv - 35Psc - 10Pmm + 0.05Ag + 0.03A -25C + 0.1Y Qg = the number of Grapple tablet computers demanded per week. Pg = the price of each new Grapple tablet (in $). Ph = the price of each Hewpaq tablet (in $). Pr = the price of each Ronova tablet. Pdv = the price to equip a tablet with Holographic digital video (in $, this is an upgrade option that enables three-dimensional graphics on a tablet. Two-dimensional graphics is standard equipment). Psc = the price of various screen sizes (in $, a 8 inch is…
- Based on the CEO's analysis, he reports to the Board that: *total revenue is unit elastic with respect to the number of locations. *total revenue is inelastic with respect to the number of locations. *total revenue is elastic with respect to the number of locations.The demand equation for cans of chicken is Qd= 60-3p Suppose the price of a can of chicken increases from $5 to $10. The price elasticity of demand is _________ (use decimals if necessary). We classify this price elasticity of demand as ____ over the $5 to $10 price change. A. Elastic B.Inelastic C.Unit elasticWhich of the following is true of heteroskedasticity? a) The R-squared statistic is affected by the presence of heteroskedasticity b) Heteroskedasticty causes inconsistency in the Ordinary Least Squares estimators c) The OLS estimators are not the best linear unbiased estimators if heteroskedasticity is present d) It is not possible to obtain F statistics that are robust to heteroskedasticity of an unknown form