Use the following data to answer the questions below. Using OLS, the estimated d

Question

Use the following data to answer the questions below.

Using OLS, the estimated demand function (P=f(Q))(P=f(Q)) is

Select one:

5. a. P=1210?48.85QP=1210?48.85Q

b. Q=2334.34?23.31PQ=2334.34?23.31P

c. Q=52.50?0.05PQ=52.50?0.05P

d. P=100.15?0.043Q

6.

Using algebra to invert the demand function, the demand function (Q=f(P))(Q=f(P)) is

Select one:

a. Q=6.51?0.007PQ=6.51?0.007P

b. Q=100.15?15.38PQ=100.15?15.38P

c. Q=2334.34?23.31PQ=2334.34?23.31P

d. P=1130?52.50Q

7.

Using calculus to determine dQdPdQdP, construct a column which calculates the point-price elasticity for each (P,Q) combination. What is the point price elasticity of demand when P=$49.80P=$49.80?

Select one:

a. 0.186

b. -0.043

c. 1165

d. -0.996

8.

Using calculus to determine dQdPdQdP, construct a column which calculates the point-price elasticity for each (P,Q) combination. What is the point price elasticity of demand when P=$49.80P=$49.80?

Select one:

a. 0.186

b. -0.043

c. 1165

d. -0.996

9.

To maximize total revenue, what would you recommend if the company was currently charging P=$49.15P=$49.15? If it was charging P=$51.00P=$51.00?

Select one:

a. Raise the price if it is currently $49.15; lower the price if it is currently $51.00.

b. Price should be raised above both $49.15 and $51.00.

c. Price should be lower than both $49.15 and $51.00.

d. Lower the price if it is currently $49.15; raise the price if it is currently $51.00.

10.

Use your first demand function to determine an equation for TRTR and MRMR as functions of QQ. What is total revenue when P=$52.50P=$52.50 and when P=$51.00P=$51.00?

Select one:

a. At P=$52.50P=$52.50, TR=$58,386TR=$58,386; at P=$51.00P=$51.00, TR=$58,425TR=$58,425.

b. At P=$52.50P=$52.50, TR=$52,343TR=$52,343; at P=$51.00P=$51.00, TR=$51,873TR=$51,873.

c. At P=$52.50P=$52.50, TR=$61,487TR=$61,487; at P=$51.00P=$51.00, TR=$62,985TR=$62,985.

d. At P=$52.50P=$52.50, TR=$34,995TR=$34,995; at P=$51.00P=$51.00, TR=$38,163TR=$38,163.

11.

What is the total-revenue maximizing price and quantity, and how much revenue is earned there?

Select one:

a. P?=$47.54P?=$47.54, Q?=1263Q?=1263, TR?=$59,008TR?=$59,008

b. P?=$49.27P?=$49.27, Q?=1168Q?=1168, TR?=$57,122TR?=$57,122

c. P?=$50.07P?=$50.07, Q?=1,167Q?=1,167, TR?=$58,445TR?=$58,445

d. P?=$51.72P?=$51.72, Q?=1,472Q?=1,472, TR?=$59,273TR?=$59,273

P Q $52.50 1130 $50.75 1145 $49.80 1165 $49.15 1170 $48.85 1210

Explanation / Answer

Answer 5:

Option D. Using regression, the equation of the demand curve using Ordinary Least Square Method is P=100.15?0.043Q.

Answer 6:

Q=2334.34?23.31P. The inverse demand curve is given by the above equation.

Answer 7:

dQ/dP = -23.31 , Elasticity = dQ / dP * P / Q = 23.31 * 49.80 / 1173.50 = -0.996. Option D.

Answer 8:

Option D. As calculated above.

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