a) Estimated elasticity of demand is the coefficient of log of price for cars which is -1.4
b) Estimated cross elasticity of demand is the coefficient of log of price of gasoline which is -1.2
c) Estimated elasticity of demand is the coefficient of log of income or GDP per capita which is 0.5
d) Since it is a long linear demand, the elasticity value will not depend on the quantity or price of own good or related good. It will be fixed at the value of coefficient of log of price for new cars. Hence the elasticity under any value is still -1.4.
(4 points) A client has provided you with data on the price of cars, the price...
4. Suppose the annual demand function for the Honda Accord is QD - 430-01PA+01Pc-10Pa where PA and Pc are the prices of Accords and Camrys and Po is the price of gas. Assume this that year the price of an Accord and the price of a Camry are both $20,000 and the price of gas is $3 per gallon. You are to use the point formula for calculating the following elasticities. Given the prices of Accords, Camrys and gas, what...
13. a. Would you expect the price elasticity of demand for gasoline to be -0.5 or -2.0 in the short run? Justify your answer. b. Assume the price of gasoline is currently $3.50 per gallon. Suppose the U.S. eliminated all gasoline imports implying that quantity of gasoline sold in the U.S. drops by 20%. Using your estimate in part a., what will the new price of gasoline be? Show your work.
Setting: 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...
Explain the main price and quantity trends you observe in the data. [realprice = Real price of gasoline (2000 $) gascap = Gas demanded per capita (gallons per month)] 1、1 CN 1975m1 1980m1 1985m1 1990m1 995m12000m1 2005m1 date realprice GasCap
Given the following estimated demand equation Answer the following questions “From the data for 46 States in the United States for 1002, the following Regression Equation was estimated: Ln C = 6.30 – 1.39 LnP + 0.67 LnY T- Stats: (0.91) (- 2.45) ( 0.45) R2 =0.78 Where C = Cigarette consumption packs per year P = real price per pack Y = real disposable income per capita a). What is the elasticity of demand for...
The demand for haddock has been estimated as log Q ¼ a þ b log P þ c log I þ d log Pm where Q ¼ quantity of haddock sold in New England P ¼ price per pound of haddock I ¼ a measure of personal income in the New England region Pm ¼ an index of the price of meat and poultry If b ¼ 2.174, c ¼ 0.461, and d ¼ 1.909, a. Determine the price elasticity of...
Setting: 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...
Cal Overhaut operates an ExxonMobil gas station franchise in Fitzhugh, MD. The price of gasoline is volatile and varies greatly from day to day. The price per gallon varies based on the seasonal blend of gasoline, which is determined by clean-air requirements, and Cal's pricing choices are limited to the profit margin for his price Base price of unleaded regular delivered in New York harbor (Sept 2018) Added cost to Cal: Maryland state gasoline tax Federal gasoline tax Delivery Advertising...
In a recent study it has been estimated that the own price elasticity of demand for a special type of U.S. manufactured automobile tires is - .75, while the income elasticity of demand is 1.1 and the cross price elasticity of demand with respect to foreign imports is 1.4. The current sales volume for the U.S. manufactured tires is 5 million unites per year. It is anticipated that the price of the foreign imports will rise by 5%. (a) Assuming...
You are given the following data on P and O for gasoline both before and affer the imposition of a per gallon tax on producers in the local market for gasoline Q 40 gallons -35 gallons -$3/gallon $4/gallon Before the Tax After the Tax Part C: Using this elastioity value, fit the given data instead into a demand function of the constant elasticity form Using this elasticity value, the constant elasticity demand function would be OA QD 48.46 P-1 B....