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zubka84 [21]
3 years ago
5

A firm has estimated the following demand function for its product:

Business
1 answer:
Rom4ik [11]3 years ago
3 0

Answer:

(i) Q=300

(ii) Elasticity of Demand=-3.33 (elastic)

(iii) Income Elasticity= 2.5 (normal good)

(iv) Advertising Elasticity: 1.5

Explanation:

The Demand function is given by

Q=100-5P+5I+15A

(1) To solve (i) we need to replace P = 200, I = 150, and A = 30 in the demand equation:

Q=100-5(200)+5(150)+15(30)=300

(2) To find the price elasticity (how much quantity demanded changes with price) we use the point price elasticity formula

\eta_{Price}=\frac{\Delta Q}{\Delta P}\frac{P}{Q}

From the above equation we get: \frac{\Delta Q}{\Delta P}=-5

Replacing in the elasticity formula

\eta_{Price}=-5\frac{200}{300}=|-3.33|>1

in absolute terms the elasticity is bigger than one so it is an elastic demand.

(3) For income elasticity (how much quantity demanded changes with income), we proceed similarly as above. But the derivative is respect to income

\eta_{Income}=\frac{\Delta Q}{\Delta I}\frac{I}{Q}=5\frac{150}{300}=2.5>1[/tex]

Which is bigger than one, denoting this is a normal good because it's bigger than one.

(4) Advertising elasticity (how much quantity demanded changes with expenditures in advertising), we proceed as before

\eta_{advertising}=\frac{\Delta Q}{\Delta A}\frac{A}{Q}=15\frac{30}{300}=1.5

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Answer: 6.40%

Explanation:

Use Excel to calculate this by the formula;

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blondinia [14]
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Emilio saw a wonderful all-in-one kitchen appliance for sale on TV. The appliance would allow him to get rid of six small applia
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C) low-ball technique.

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The low ball sales technique is legal, although it is also deceiving. It refers to a technique where a good or service is offered at a low price to attract customers' attention, and then the product or service is offered at a much higher price to include all the amenities or functions initially offered.

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Caspian Sea Drinks needs to raise $41.00 million by issuing bonds. It plans to issue a 14.00 year semi-annual pay bond that has
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Answer:

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Rate = Yield/2 = 2.42%

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Managers today need to look past traditional viewpoints in determining the success of their company's strategy. One such approac
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Answer:

The Balanced Scorecard

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Goal:  Service: This would be the level of customer service.

Measure:  How do our customers see us? Survey: This would be the results of an online customer satisfaction survey.

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Perspective: Internal business: This perspective focuses on the things that a company has to do internally to meet and exceed customer expectations.

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Perspective: Financial: This perspective has to do with the conversion of performance into financial performance and the creation of value.

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Measure: Can we continue to improve and create value?  Sales: This would be the annual sales figures.

Explanation:

The balanced scorecard which Bryan is developing for KanO Mines helps KanO Mines to understand how to create value in the organization.  With the balanced scorecard as a strategic planning and management tool, organizational goals are communicated to KanO Mines, so that his daily activities are aligned with the organizational strategy.  It also helps him to prioritize his projects, products, and services.  The balanced scorecard does not only deal with perspectives and goals, it also helps KanO Mines and his manager, Bryan, to measure and monitor his progress towards achieving the set organizational strategic goals.

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