You directed your research department to do some research on the demand for Tesla sedans. They selected BMW i3 Sedans and Chevy Bolts as comparative offerings. Using regression analysis, the research department comes up the following estimate for yearly demand. Qx = -40,000 -1*Px +0.02*M +2*PB +2*PC Where: Px = $70,000, M = $150,000, PB = $65,000, PC = $40,000 a. Is the own price elasticity of demand for Tesla sedans at the point defined above elastic or inelastic? If Mr. Musk decides to raise his prices, what will happen to his revenue. b. PB and PC represent the price for i3 sedans and Bolt sedans respectively. Are these items compliments or substitutes when compared to Teslas? Give evidence to support your answ

You directed your research department to do some research on the demand for Tesla sedans. They selected BMW i3 Sedans and Chevy Bolts as comparative offerings. Using regression analysis, the research department comes up the following estimate for yearly demand. Qx = -40,000 -1Px +0.02M +2PB +2PC Where: Px = $70,000, M = $150,000, PB = $65,000, PC = $40,000 a. Is the own price elasticity of demand for Tesla sedans at the point defined above elastic or inelastic? If Mr. Musk decides to raise his prices, what will happen to his revenue. b. PB and PC represent the price for i3 sedans and Bolt sedans respectively. Are these items compliments or substitutes when compared to Teslas? Give evidence to support your answ

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 5E

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General Cereals is using a regression model to estimate the demand for Tweetie Sweeties, a whistle-shaped, sugar-coated breakfast cereal for children. The following (multiplicative exponential) demand function is being used: QD=6,280 P(−1.85)A2.05N2.70QD=6,280 P−1.85A2.05N2.70 where QDQD = quantity demanded, in 10-oz boxes PP = price per box, in dollars AA = advertising expenditures on daytime television, in dollars NN = proportion of the population under 12 years old, in percent What is the point price elasticity of demand for Tweetie Sweeties? 2.05 2.70 -0.90 -1.85 What is the advertising elasticity of demand? 0.76 -1.85 2.70 2.05
According to the reading "Gasoline Consumption in the US and Norway", the estimate for the long- run price elasticity of demand was Ed=1.44. We also know that there is better access to public transportation in Norway than in the US. So, this estimate likely the true long-run price elasticity of demand for gasoline. In other words, if the public transit system in Norway was the same as in the US, a 1% increase in the price of gas would reduce the quantity demanded in the long-run by. than 1.44%. (Fill in the blanks.) O Overstates, more. Overstates, less. Overstates, more. O Understates, less.
I am unsure how to solve for B in the problem below. Integrating Problem: The research department of the Corn Flakes Corporation (CFC) estimated the following regression for the demand of the cornflakes it sells: QX = 1.0 - 2.0PX + 1.5I + 0.8PY - 3.0PM + 1.0A where QX = sales of CFC cornflakes, in millions of 10-ounce boxes per year PX = the price of CFC cornflakes, in dollars per 10-ounce box I = personal disposable income, in trillions of dollars per year PY = price of competitive brand of cornflakes, in dollars per 10-ounce box PM = price of milk, in dollars per quart A = advertising expenditures of CFC cornflakes, in hundreds of thousands of dollars per year This year, PX = $2, I = $4, PY = $2.50, PM = $1, and A = $2. (a) Calculate the sales of CFC cornflakes this year. (b) Calculate the elasticity of sales with respect to each variable in the demand function. (c) Estimate the level of sales next year if CFC reduces PX by 10 percent and increases advertising by 20 percent, I rises…
Hello, I am trying to find the equations on my calculator for the price-demand and price supply equations. The data is in the attached image. I think I am doing something wrong, but not sure what. I found the quadratic regression model for the first set of data using my calculator, but I used the p=D(x) as list one, and x, as list two. I came up with 0.028x^2-23x +5743 is this right? or do I need the reverse the order? For the price-supply data I but the p=S(x) as list 1 and x as list 2 and I got the linear regression function: 2 5.1x+342 Can you please let me know if I am on the right track?
Using the data below, what is the slope coefficient from a regression of Quantity on Price? It is probably easiest to use either Gretl or Jamovi as in the powerpoint example. (round your answer to the nearest 0.1, and it can be either positive or negative.) Quantity 17 24 23 39 55 54 60 76 71 80 Price 93 77 62 64 47 35 38 12 29 2
(Part C only) Other Companies (Part 2) You directed your research department to do some research on the demand for Tesla sedans. They selected BMW i3 Sedans and Chevy Bolts as comparative offerings. Using regression analysis, the research department comes up the following estimate for yearly demand. Qx = -40,000 -1*Px +0.02*M +2*PB +2*PC Where: Px = $70,000, M = $150,000, PB = $65,000, PC = $40,000 a. Is the own price elasticity of demand for Tesla sedans at the point defined above elastic or inelastic? If Mr. Musk decides to raise his prices, what will happen to his revenue. b. PB and PC represent the price for i3 sedans and Bolt sedans respectively. Are these items compliments or substitutes when compared to Teslas? Give evidence to support your answer. c. Is the demand for Tesla sedans elastic or inelastic to price changes of BMW i3 and Bolt at the price points given in the problem? Interpret the result you find and explain what it means.
Use the following information to answer the following question. The following linear demand specification is estimated for Spiker Drones, a price-setting firm: Q= a + bP + CM + DPR where Q is the quantity demanded for the product Spiker Drones sells, P is the price of that product, M is the income, and PR is the price of a related good. The results of the estimation are presented below: DEPENDENT VARIABLE: Q OBSERVATIONS: 32 R-SQUARE 0.7984 F-RATIO P-VALUE ON F 36.14 0.0001 PARAMETER VARIABLE ESTIMATE STANDARD ERROR T-RATIO P-VALUE INTERCEPT 846.30 76.70 11.03 0.0001 P -8.60 2.60 -3.31 0.0026 M 0.0184 0.0048 3.83 0.0007 PR -4.3075 1.230 -3.50 0.0016 Assume that the income is $10,000, the price of the related good is $40, and Spiker Drones sets the price of this product at $30. At the prices and income given above, what is the income elasticity? A. -1.62 B. -0.87 C. 0.21 D. 0.31 E. None of the above.
The following table shows worldwide sales of a certain type of cell phone and their average selling prices in 2012 and 2013. Year 2012 2013 Selling Price ($) 395 325 Sales (millions) 741 1,133 (a) Use the data to obtain a linear demand function for this type of cell phone. (Let p be the price, and let q be the demand). q(p) = Use your demand equation to predict sales if the price is lowered to $255. million phones (b) Fill in the blank. For every $1 increase in price, sales of this type of cell phone decrease by million units.
The Physics Club sells E = mc2 T-shirts at the local flea market. Unfortunately, the club's previous administration has been losing money for years, so you decide to do an analysis of the sales. A quadratic regression based on old sales data reveals the following demand equation for the T-shirts. q = −2p2 + 30p (9 ≤ p ≤ 15) Here, p is the price the club charges per T-shirt, and q is the number it can sell each day at the flea market. (a) Obtain a formula for the price elasticity of demand for E = mc2 T-shirts. E = (b) Compute the elasticity of demand if the price is set at $9 per shirt. (Round your answer to two decimal places.) Interpret the result. The demand for E = mc2 T-shirts is going down by about ____% per 1% increase in the price. (c) How much should the Physics Club charge for the T-shirts to obtain the maximum daily revenue? $ What will the revenue be? $
The Physics Club sells E = mc? T-shirts at the local flea market. Unfortunately, the club's previous administration has been losing money for years, so you decide to do an analysis of the sales. A quadratic regression based on old sales data reveals the following demand equation for the T-shirts. 9 = -2p2 + 33p (9 < ps 15) Here, p is the price the club charges per T-shirt, and g is the number it can sell each day at the flea market. (a) Obtain a formula for the price elasticity of demand for E = mc2 T-shirts. E = (b) Compute the elasticity of demand if the price is set at $9 per shirt. (Round your answer to two decimal places.) Interpret the result. The demand for E = mc2 T-shirts is going down v by about % per 1% increase in the price. (c) How much should the Physics Club charge for the T-shirts to obtain the maximum daily revenue? $ What will the revenue be?
The demand function for good X is ln Qdx= a + b ln Px + c ln M + e, where Px is the price of good X and M is income. Least squares regression reveals that â = 7.42, b ˆ = −2.18, and ĉ = 0.34. a. If M = 55,000 and Px = 4.39, compute the own price elasticity of demand based on these estimates. Determine whether demand is elastic or inelastic. b. If M = 55,000 and Px = 4.39, compute the income elasticity of demand based on these estimates. Determine whether X is a normal or inferior good.
Question 9 Regression analysis was applied between demand for a product (Y) and the price of the product (X), and the following estimated regression equation was obtained. Y = 120 - 15 X Based on the above estimated regression equation, if price is increased by 2 units, then demand is expected to: O Increase by 120 units Decease by 30 units O Increase by 2Q units Next « Previous Submi No new data to save. Last checked at 9:51pm