All questions utilize the multivariate demand function for Smooth Sailing sailboats in C6 on text page 83. Compute to three decimal places.

Initial values are:      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

1.(a). Use the above to calculate the arc price elasticity of demand between P_S = $9000 decreasing to P_S = $8000. The arc elasticity formula is:

1.(b). Judging from the computation in (a), do you expect the revenue resulting from the decrease in Ps to $8000 to increase, remain the same, or decrease relative to the revenue at Ps = $9000. (Hint: see the table on page 65 of Truett). Explain your choice.

1.(c). Calculate the point elasticity of demand for Smooth Sailing sailboats at P_S= $9000 (which should make Q_s= 101600). The formula is:

1.(d). Does this elasticity value indicate that Smooth Sailing demand is relatively responsive to changes in the price of these sailboats? Explain why or why not.

1.(e). Calculate the point “motorboat” price elasticity of demand when Py = $10000. Use Qs corresponding to P_S = $9000 which should make Qs = 101600.   Other variables and their values are given at the top, before question #1.    The formula is:

1.(f). Does this elasticity indicate that the demand for Smooth Sailing’s boats is relatively responsive to changes in the price of Company Y’s motorboats? Explain why or why not.

1.(g). Calculate the point income elasticity of demand assuming I = $15000 and that Ps = $8500 (this should make Q_S = 431,600) and that the other variables are as given at the top before #1. The formula is:

1.(h). Does this elasticity coefficient indicate that the demand for Smooth Sailing boats is relatively responsive to changes in advertising expenditures? Explain why or why not.

1.(i). Weather forecasters point out that the number of favorable weather days is an important determinant of sailboat sales. Calculate the point elasticity of demand for Smooth Sailing boats assuming Ps = $9000 (thus Qs = 101600 boats) and W = 160. The other variables and their values are as given at the top before #1. The formula is:

1.(j). Does this elasticity coefficient indicate that the demand for Smooth Sailing boats is relatively responsive to changes in income? Explain why or why not.
Transcribed Image Text:EA = ƏQs W aw Qs 1.(1). Does this elasticity coefficient indicate that the demand for Smooth Sailing boats is relatively responsive to changes in income? Explain why or why not. Elasticity7.docx 060272022
Transcribed Image Text:Initial values are: This function is: 1.(a). Use the above to calculate the arc price elasticity of demand between Ps = $9000 decreasing to Ps= $8000. The arc elasticity formula is: AQ P₁ + P₂ . AP Q₁ + Q₂ Ep = 1.(b). Judging from the computation in (a), do you expect the revenue resulting from the decrease in Ps to $8000 to increase, remain the same, or decrease relative to the revenue at Ps = $9000. (Hint: see the table on page 65 of Truett). Explain your choice. 1.(c). Calculate the point elasticity of demand for Smooth Sailing sailboats at Ps= $9000 (which should make Q₁ = 101600). The formula is: ƏQs Ps aps Qs Est Ep = 1.(d). Does this elasticity value indicate that Smooth Sailing demand is relatively responsive to changes in the price of these sailboats? Explain why or why not. 1.(e). Calculate the point "motorboat" price elasticity of demand when Px = $10000. Use Qs corresponding to Ps = $9000 which should make Qs = 101600. Other variables and their values are given at the top..before question #1. The formula is: Px= $9500 Py=$10000 I = $15000 A = $170000 W = 160 Qs = 89830 -40Ps +20Px +15Py +21+.001A +10W EA = 8Qs Py OPY Qs 1.(f). Does this elasticity indicate that the demand for Smooth Sailing's boats is relatively responsive to changes in the price of Company Y's motorboats? Explain why or why not. 1.(g). Calculate the point income elasticity of demand assuming I = $15000 and that Ps= $8500 (this should make Qs = 431,600) and that the other variables are as given at the top before #1. The formula is: = ƏQs 1 81 Qs 1.(h). Does this elasticity coefficient indicate that the demand for Smooth Sailing boats is relatively responsive to changes in advertising expenditures? Explain why or why not. 1.(1). Weather forecasters point out that the number of favorable weather days is an important determinant of sailboat sales. Calculate the point elasticity of demand for Smooth Sailing boats assuming Ps= $9000 (thus Qs = 101600 boats) and W = 160. The other variables and their values are as given at the top before #1. The formula is:

Question

All questions utilize the multivariate demand function for Smooth Sailing sailboats in C6 on text page 83. Compute to three decimal places.

Initial values are: 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

1.(a). Use the above to calculate the arc price elasticity of demand between P_S = $9000 decreasing to P_S = $8000. The arc elasticity formula is:

1.(b). Judging from the computation in (a), do you expect the revenue resulting from the decrease in Ps to $8000 to increase, remain the same, or decrease relative to the revenue at Ps = $9000. (Hint: see the table on page 65 of Truett). Explain your choice.

1.(c). Calculate the point elasticity of demand for Smooth Sailing sailboats at P_S= $9000 (which should make Q_s= 101600). The formula is:

1.(d). Does this elasticity value indicate that Smooth Sailing demand is relatively responsive to changes in the price of these sailboats? Explain why or why not.

1.(e). Calculate the point “motorboat” price elasticity of demand when Py = $10000. Use Qs corresponding to P_S = $9000 which should make Qs = 101600. Other variables and their values are given at the top, before question #1. The formula is:

1.(f). Does this elasticity indicate that the demand for Smooth Sailing’s boats is relatively responsive to changes in the price of Company Y’s motorboats? Explain why or why not.

1.(g). Calculate the point income elasticity of demand assuming I = $15000 and that Ps = $8500 (this should make Q_S = 431,600) and that the other variables are as given at the top before #1. The formula is:

1.(h). Does this elasticity coefficient indicate that the demand for Smooth Sailing boats is relatively responsive to changes in advertising expenditures? Explain why or why not.

1.(i). Weather forecasters point out that the number of favorable weather days is an important determinant of sailboat sales. Calculate the point elasticity of demand for Smooth Sailing boats assuming Ps = $9000 (thus Qs = 101600 boats) and W = 160. The other variables and their values are as given at the top before #1. The formula is:

1.(j). Does this elasticity coefficient indicate that the demand for Smooth Sailing boats is relatively responsive to changes in income? Explain why or why not.

EA
=
ƏQs W
aw Qs
1.(1). Does this elasticity coefficient indicate that the demand for Smooth Sailing boats is relatively
responsive to changes in income? Explain why or why not.
Elasticity7.docx 060272022

Initial values are:
This function is:
1.(a). Use the above to calculate the arc price elasticity of demand between Ps = $9000 decreasing
to Ps= $8000. The arc elasticity formula is:
AQ P₁ + P₂
.
AP Q₁ + Q₂
Ep
=
1.(b). Judging from the computation in (a), do you expect the revenue resulting from the decrease
in Ps to $8000 to increase, remain the same, or decrease relative to the revenue at Ps = $9000.
(Hint: see the table on page 65 of Truett). Explain your choice.
1.(c). Calculate the point elasticity of demand for Smooth Sailing sailboats at Ps= $9000 (which
should make Q₁ = 101600). The formula is:
ƏQs Ps
aps Qs
Est
Ep =
1.(d). Does this elasticity value indicate that Smooth Sailing demand is relatively responsive to
changes in the price of these sailboats? Explain why or why not.
1.(e). Calculate the point "motorboat" price elasticity of demand when Px = $10000. Use Qs
corresponding to Ps = $9000 which should make Qs = 101600. Other variables and their values are
given at the top..before question #1. The formula is:
Px= $9500 Py=$10000 I = $15000 A = $170000 W = 160
Qs = 89830 -40Ps +20Px +15Py +21+.001A +10W
EA
=
8Qs Py
OPY Qs
1.(f). Does this elasticity indicate that the demand for Smooth Sailing's boats is relatively
responsive to changes in the price of Company Y's motorboats? Explain why or why not.
1.(g). Calculate the point income elasticity of demand assuming I = $15000 and that Ps= $8500
(this should make Qs = 431,600) and that the other variables are as given at the top before #1. The
formula is:
=
ƏQs 1
81 Qs
1.(h). Does this elasticity coefficient indicate that the demand for Smooth Sailing boats is relatively
responsive to changes in advertising expenditures? Explain why or why not.
1.(1). Weather forecasters point out that the number of favorable weather days is an important
determinant of sailboat sales. Calculate the point elasticity of demand for Smooth Sailing boats
assuming Ps= $9000 (thus Qs = 101600 boats) and W = 160. The other variables and their values
are as given at the top before #1. The formula is:

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