Question

P_X= $9500    P_Y= $10000  I = $15000     A = $170000  W = 160

This function is:

                       Qs = 89830 -40P_S+20P_X+15P_Y+2I +.001A +10W

Calculate the point price elasticity of demand at P_S = $9000 (which should make Q_S = 101600). Does this elasticity (E) value indicate that Smooth Sailing boat demand is relatively responsive to Smooth Sailing boat price changes? Explain why or why not. The formula is E=(dQs/dPs)*(Ps/Qs)

Calculate the point weather elasticity of demand with W = 160. Use Qs corresponding to Ps = 9000.   Other variables and their values are as given at the top, before question #1. Does this elasticity indicate that the demand for Smooth Sailing's boats is relatively responsive to changes in the number of favorable weather days? Explain why or why not. The formula is E=(dQs/W)*(W/Qs)

Calculate the point income elasticity of demand, given that I = $170,000 and that P_S = $8500 (thus Q_S should equal 431,600). Other variables are as given at the top before #1. Does this elasticity indicate that the demand for Smooth Sailing boats is relatively responsive to changes in income? Explain why or why not. The formula is E=(dQs/I)*(I/Qs)

Answer 1

Qs = 89830-40 ps + 20 P x + 15 Py+20 +0.001 A+low I= 15,000 At, PX 2 9500, A = 170000 PY=10,000 W = 160 Qs : 89830 - 40PS + 20x9500 + 15 X 10,000+ 2X15000 0.00LX170000 + COX160 Qs = 461600 - 40PS so, de 2-40 and at PS = 9000 - Qs = 461600 - 40x9000 = 101,600 So, elasticily - - 40x 2000 2354 704600 so, value indicates smooth Sailing boat price boat demand is relatine Sponsive to smooth Sailing boat price change Weather elasticity . at ps = 9000 Qs = 101,600 So, elastrcing do y dos = 107 = 10x 160 = 0.016 LI Iso, Demand for boaks is not response to changes Pin tuhe ullather days. TAX

Inecome elastraly Now I 2 170,000 previon I = 15,000 SO, DI 170.000 - 15000 = 155000 1 so, Qs = 461600-40Ps + 2/155000) = 77 1600 - 40ps and day = 2 h - das. I elasticily - die = 20 170000 20.79 L 431600 Demand for smooth sailing boab is not respo very responsite to changes in income