Suppose demand for a firm’s semiconductor chips is: q = 325 – 4P + 0.75PR +...
Suppose demand for a firm’s semiconductor chips is:
q = 325 – 4P + 0.75PR + 5A + 3.5Y
where P is the price of the firm’s semiconductor, PR is the price of a competing chip, A is advertising expenditures (in $1000), and Y is average income (in $1000). Suppose PR = 120, A = 15, and Y = 60.
1. Derive the inverse demand function of the firm
2. If the firm chooses a price of 130, how many chips does it sell?
3. Derive the following:
- Income elasticity of demand (is the good normal?)
- Advertising elasticity of demand
- Cross-price elasticity of demand
- Price elasticity of demand
4. Assume that a high cross-price elasticity is 0.2 or higher. Should the rival and the firm be in the same relevant market? Explain.
Homework Answers
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Suppose demand for a firm’s semiconductor chips is:
q = 325 – 4P + 0.75PR +...
Suppose demand for inkjet printers is estimated to be Q 1000 2pz + 0.1 Y. If...
Suppose demand for inkjet printers is estimated to be Q 1000 2pz + 0.1 Y. If p = 90, px = 70, pz = 130, and Y = 21,000; answer the following: 5p + 10px a. What is the price elasticity of demand? b. What is the cross price elasticity with respect to commodity X? Give an example of what commodity X might be. c. What is the cross price elasticity with respect to commodity Z? Give an example of...
1. Elasticities Consider the following supply and demand functions AD = 16-4p Is2 +5p a) Plot the supply and demand...
1. Elasticities Consider the following supply and demand functions AD = 16-4p Is2 +5p a) Plot the supply and demand functions. b) What are the equilibrium price and quantity? c) At the equilibrium price and quantity, what is the price elasticity of demand? d) Interpret the price elasticity of demand. How much will quantity change if the price increases by 1%? e) Suppose I were to calculate an income elasticity of 0.1. What does this imply about the good in...
4. Given the estimated demand function for good 1: Q = 50 - 4P,-3.2P, + 0.017,...
4. Given the estimated demand function for good 1: Q = 50 - 4P,-3.2P, + 0.017, where P, and P, are prices for good 1 and 2, respectively, and Y is income. (a) (2 points) Are good 1 and good 2 complements or substitutes? Why? (b) (3 points) Calculate the cross-price elasticity of demand for good 1, with respect to the price of good 2, given P, = $1.20, P, = 3.50, and Y = $15,000.
Suppose the demand function is given use derivative to derive the following: QX = 500 Px0.10...
Suppose the demand function is given use derivative to derive
the following:
QX = 500 Px0.10
Pz3.34 I-1.4
6.1 Derive the price elasticity of demand
6.2 The Cross Price elasticity
6.3 The Income elasticity
6.4 Interpret the results of each elasticity.
6. Suppose the demand function is given derivatives to derive the following: use 3.34 500 P10 P334114 Qx Z 6.1 Derive the price elasticity of demand 6.2 The Cross Price elasticity 6.3 The Income elasticity 6.4 Interpret the results...
15. Suppose the demand function for a good is expressed as Q = 100 - 4p....
15. Suppose the demand function for a good is expressed as Q = 100 - 4p. If the good currently sells for $10, then the price elasticity of demand equals ОА. – 4. ов. - 1.5. Ос. - 2.5. OD. – 0.67. 16. If the demand curve for comic books is expressed as Q = 10,000/p, then demand has a unitary elasticity O A. always. OB. never. O c. only when p = 100. OD. only when p = 10,000.
4. (6 points) Suppose the Demand for baseballs is given by Q=120 - 4P. a) What...
4. (6 points) Suppose the Demand for baseballs is given by Q=120 - 4P. a) What is the price elasticity of demand when P=102 b) At what price will Total Revenue be maximized? c) What is the firm's Marginal Revenue when the price is $12?
4. (6 points) Suppose the Demand for baseballs is given by Q = 120 - 4P. a) What is the price elasticity of demand...
4. (6 points) Suppose the Demand for baseballs is given by Q = 120 - 4P. a) What is the price elasticity of demand when P= 10? b) At what price will Total Revenue be maximized? c) What is the firm's Marginal Revenue when the price is $12?
4. (6 points) Suppose the Demand for baseballs is given by Q = 120 – 4P. a) What is the price elasticity of demand when...
4. (6 points) Suppose the Demand for baseballs is given by Q = 120 – 4P. a) What is the price elasticity of demand when P= 10? b) At what price will Total Revenue be maximized? c) What is the firm's Marginal Revenue when the price is $12?
An economic consultant for X Corp. recently provided the firm’s marketing manager with this estimate of the demand function for the firm’s product:
An economic consultant for X Corp. recently provided the firm’s marketing manager with this estimate of the demand function for the firm’s product: Q d x = 98 − 4Px + 6Py − 1M where Qd x represents the amount consumed of good X, Px is the price of good X, Py is the price of good Y , and M is income. Suppose good Y sells for $2 per unit and consumer income is $10. (a) Are goods X and Y substitutes...
3. Suppose the demand function for a firm's product is given by In Q 7-1.5 In...
3. Suppose the demand function for a firm's product is given by In Q 7-1.5 In P 2 In P, -0.5 In M +InA where P = $15, P, = $6, M $40,000, and A $350. a. Determine the own price elasticity of demand, and state whether demand is b. Determine the cross-price elasticity of demand between good X and good c. Determine the income elasticity of demand, and state whether good X is a d. Determine the own advertising...
Suppose demand for inkjet printers is estimated to be Q 1000 2pz + 0.1 Y. If p = 90, px = 70, pz = 130, and Y = 21,000; answer the following: 5p + 10px a. What is the price elasticity of demand? b. What is the cross price elasticity with respect to commodity X? Give an example of what commodity X might be. c. What is the cross price elasticity with respect to commodity Z? Give an example of...
1. Elasticities Consider the following supply and demand functions AD = 16-4p Is2 +5p a) Plot the supply and demand functions. b) What are the equilibrium price and quantity? c) At the equilibrium price and quantity, what is the price elasticity of demand? d) Interpret the price elasticity of demand. How much will quantity change if the price increases by 1%? e) Suppose I were to calculate an income elasticity of 0.1. What does this imply about the good in...
4. Given the estimated demand function for good 1: Q = 50 - 4P,-3.2P, + 0.017, where P, and P, are prices for good 1 and 2, respectively, and Y is income. (a) (2 points) Are good 1 and good 2 complements or substitutes? Why? (b) (3 points) Calculate the cross-price elasticity of demand for good 1, with respect to the price of good 2, given P, = $1.20, P, = 3.50, and Y = $15,000.
Suppose the demand function is given use derivative to derive
the following:
QX = 500 Px0.10
Pz3.34 I-1.4
6.1 Derive the price elasticity of demand
6.2 The Cross Price elasticity
6.3 The Income elasticity
6.4 Interpret the results of each elasticity.
6. Suppose the demand function is given derivatives to derive the following: use 3.34 500 P10 P334114 Qx Z 6.1 Derive the price elasticity of demand 6.2 The Cross Price elasticity 6.3 The Income elasticity 6.4 Interpret the results...
15. Suppose the demand function for a good is expressed as Q = 100 - 4p. If the good currently sells for $10, then the price elasticity of demand equals ОА. – 4. ов. - 1.5. Ос. - 2.5. OD. – 0.67. 16. If the demand curve for comic books is expressed as Q = 10,000/p, then demand has a unitary elasticity O A. always. OB. never. O c. only when p = 100. OD. only when p = 10,000.
4. (6 points) Suppose the Demand for baseballs is given by Q=120 - 4P. a) What is the price elasticity of demand when P=102 b) At what price will Total Revenue be maximized? c) What is the firm's Marginal Revenue when the price is $12?
4. (6 points) Suppose the Demand for baseballs is given by Q = 120 - 4P. a) What is the price elasticity of demand when P= 10? b) At what price will Total Revenue be maximized? c) What is the firm's Marginal Revenue when the price is $12?
4. (6 points) Suppose the Demand for baseballs is given by Q = 120 – 4P. a) What is the price elasticity of demand when P= 10? b) At what price will Total Revenue be maximized? c) What is the firm's Marginal Revenue when the price is $12?
3. Suppose the demand function for a firm's product is given by In Q 7-1.5 In P 2 In P, -0.5 In M +InA where P = $15, P, = $6, M $40,000, and A $350. a. Determine the own price elasticity of demand, and state whether demand is b. Determine the cross-price elasticity of demand between good X and good c. Determine the income elasticity of demand, and state whether good X is a d. Determine the own advertising...
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