After a careful statistical analysis, the Chidester Company concludes the demand function for its product is Q = 500 - 3P + 2Pr + 0.1I where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000. What is the implicit assumption regarding the population in the market?
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After a careful statistical analysis, the Chidester Company concludes the demand function for its product is
Q = 500 - 3P + 2Pr + 0.1I
where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000.
What is the implicit assumption regarding the population in the market?
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- After a careful statistical analysis, the Chidester Company concludes the demand function for its product is Q = 500 - 3P + 2Pr + 0.1I where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000. What is the price elasticity of demand for the firm’s product? a. -0.0291 b. -0.027 c. -0541 d. -.270After a careful statistical analysis, the Chidester Company concludes the demand function for its product is Q = 500 - 3P + 2Pr + 0.1I where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000. What is the current output level Q? a. 1030 b. 1100 c. 610 d. 1110After a careful statistical analysis, the Chidester Company concludes the demand function for its product is Q = 500 - 3P + 2Pr + 0.1I where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000. What is the income elasticity of demand for the fi rm’s product? a. -0.5405 b. 0.5405 c. 1.0811 d. 0.5825
- TABLE 12.1 | Two Stage Least Squares Estimates of the Demand for Cigarettes Using Panel Data for 48 U.S. States Dependent variable: In(Qfte) – In(Qfte) cigarettes Regressor (1) (2) (3) In(Peisarettes) - In(Pçigarettes -0.94** -1.34** -1.20** i,1995 i,1985 (0.21) (0.23) (0.20) In(Inc;1995) – In(Inc;1985) 0.53 (0.34) 0.43 (0.30) 0.46 (0.31) Intercept -0.12 -0.02 -0.05 (0.07) (0.07) (0.06) Both sales tax and Instrumental variable(s) Sales tax Cigarette-specific tax cigarette-specific tax First-stage F-statistic 33.70 107.20 88.60 Overidentifying restrictions J-test and p-value 4.93 (0.026) These regressions were estimated using data for 48 U.S. states (48 observations on the 10-year differences). The data are described in Appendix 12.1. The J-test of overidentifying restrictions is described in Key Concept 12.6 (its p-value is given in parentheses), and the first-stage F-statistic is described in Key Concept 12.5. Individual coefficients are statistically significant at the *5%…After a careful statistical analysis, the Chidester Company concludes the demand function for its product is Q = 500 - 3P + 2Pr + 0.1I where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000. What is the cross- price elasticity of demand between its product and its rival’s product? a. 0.0388 b. 0.0721 c. 0.0360 d. -0.03602. After a careful statistical analysis, the Chidester Company concludes the demand function for its product is Q = 500 - 3P + 2Pr + 0.1Iwhere Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20 and I = $6,000.a. What is the price elasticity of demand for the firm’s product?b. What is the income elasticity of demand for the firm’s product?c. What is the cross-price elasticity of demand between its product and its rival’s product?d. What is the implicit assumption regarding the population in the market?
- The demand function for a car manufacturing firm is presented as follows:- Q=−500P+210Px+200P+20pop-1,000,000i+600A Where, Q =Demand for firm′s car; P = Price of Domestic Manufacturers; PX = Price of New Luxury Cars; I = Disposable Income per Household; Pop = Population; I = Interest Rates; A = Advertising Campaign Explain the extent to which demand changes when any of the independent variables changes.E EX 4 . Suppose revenue from the sale of new homes in a certain country decreased dramatically from 2005 to 2010 as shown in the model r(t) = 413e-0.326t billion dollars per year (0 sts 5), where t is the year since 2005. If this trend were to have continued into the indefinite future, estimate the total revenue from the sale of new homes in the country from 2005 on. HINT [See Example 1.] (Round your answer to the nearest biltion dollars.) !!A firm keeps a record of sales and prices over the past seven months, resulting in the following table: Price (ZMW/ton) Sales (tons) Nov. 1985 7.5 84.5 Dec. 8.0 82.0 Jan. 1986 8.0 84.0 Feb. 7.2 92.0 March 7.0 95.0 April 8.0 92.0 May 8.5 91.5 Use these observations to estimate demand as a linear function of both price and time. Further, utilise this function to estimate demand for the following month, on the assumption that: (a) price remains unchanged, (b) price increases to ZMW9/ton. Hence estimate the price elasticity of demand between these prices and find the price which would maximise sales revenue. Given the nature of the observations, comment on any difficulties in interpreting your results for decision-making purposes.
- You are an economist. Your friend started a new business selling masks. She asked for your help in making some important decisions. From the data obtained from her, you computed the Price Elasticity of Demand (PED) of Masks, and found absolute PED in February was 1.26, and since then the absolute PED of Masks declined by 30% in June. (a) Based on the PED of June, you would advise your friend for an increase/decrease/unchanged in the price - Insert one word answer (increase/decrease/unchanged) (b) The market price of the mask in July was Tk15 per unit. The total revenue earned in July was Tk300. You received the data for August and observed that the price now in August is Tk26 per unit and the quantity of masks sold in August is 9 units. Calculate the absolute value of Price Elasticity of Demand (PED) for masks from July to August. Do not convert into percentage. Give your answer in 2 decimal places. Eg. If you get PED = -0.253 then submit 0.25The rise of digital music and the improvement to the DVD format are part of the reasons why the average selling price of standalone DVD recorders will drop in the coming years. The function below gives the projected average selling price (in dollars) of standalone DVD recorders in year t, where t = 0 corresponds to the beginning of 2002.† A(t) = 699 (t + 1)0.94 (0 ≤ t ≤ 5) What was the average selling price of standalone DVD recorders at the beginning of 2003? At the beginning of 2006? (Round your answers to the nearest dollar.) 2003$. 2006$Elasticity of demand has an effective role in the decisions of business firms. Moreover, Government rules and regulations also get affected by the change in prices of these businesses. The elasticity demand concept effectively influences devaluation and depreciation of acurrency on the export earnings of the country. It is of utmost importance that the business firms take elasticity of demand into consideration. With the increase in the elasticity of demand, the consumption behavior of the consumers also