1-Suppose that we have the following sales function: Q X = -4P x + 2P Y + 0.2I +
ID: 1133802 • Letter: 1
Question
1-Suppose that we have the following sales function: QX = -4Px + 2PY + 0.2I + 0.04A
Px = $ 200, the Price of good X, Py = $140, the price of good Y, I =2,000, income, A = $15,000 advertizing expenditures
Demand for good X could be classified as ?
2- the demand for Hybrid fuel efficient cars can be characterized by the following point elasticities: price elasticity -4, cross-price elasticity with Smart Cars = +2, and income elasticity is 2.5.
According to above mentioned information, hybrid fuel efficient cars are?
3- We have the following sales function: QX = -4Px + 2PY + 0.2I + 0.04A, where:
Px = $ 200, the Price of good X , Py = $140, the price of good Y, I =2,000, income, A = $15,000 advertizing expenditures.
From the above equation we can infer that product X and product Y are?
4-The price of the water resistant mascara of WOMEN BUTY Corp. decreased from $10 a unit to $8 a unit and the quantity sold during last month increased by twelve percent. Hence the demand for WOMEN BUTY water resistant mascara is?
Explanation / Answer
Answer- Qx = -4(200)+ 2(140)+ 0.2(2000)+0.04(15000)
= -800+280+400+600
= 480
Also dQx/dpx = -4 so demand for good x could be classified as Normal good as price of good x increases the quantity demanded for it decreases.
(2) the hybrid fuel efficient cars are highly elastic.
(3) dQx/dpy = 2 , so good X and Y are substitutes for each other.
(4) elastic
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