Question

2. The following demand function has been estimated for typiske machines Q-3,500.40P 17.5P, 6700 .000 +6.SOON where P-monthly rental price of Fantasy pinball machines P. - monthly rental price of O ccapital machines the largest competitor) U-current unemployment me in the 10 largest polita Aadvertising expenditures for Fantasy pinball machines N-fraction of the US, population between ages 10 and (a) (b) What is the point price clasticity of demand for at pinball chines when P-S150, P. -$100, U-12, A-5200,000 and N-35 What is the point cross clasticity of demand with respect to Ou Chicago pinball machines for the values of the independent variables given in

Answer 1

- wyLumpanlon Q = 3500 – 40(150) +17.5 (100) + 670 (0.12) + 0.009(20000m +6500 (0.35) Q = 3500 - 6000+ 1750 + 80.4 + 1800+ 2275 = 3405.4 yo At P=150, Q = 3405.4 aQ - -40 ӘР Point Ed = lx da 150 x -40 g ӘР 3405.4 (-1.76) 6000 3405.4 bi bross puice Ed = . in quantity denlanded of fantasy Pinball machines A is independent vacuables o cross pelice Edo Pxx a Q opac 0.51) = 100 x17.5 1750 3405.4 3405.4 - ü) Ed with respect to current unemployment ao 0.12 X 670 au 3405.4 Scanned with CamScanner 0.023

T in Ed with = mycompanion respect to advertising expenditure -Axa - að0000 x-0.009 1800 3405.4 0.53 (W) Ed with I between respect to fraction of us population ages 10 & 30 NxOQ = 0.35 X 6500 3405.4 fes scanned with CamScanner = 2275 0.67) 3405.4