Determine and discuss the impact of diesel prices on fuel revenues and the impact of gasoline prices on fuel revenues. What is the relationship between meal prices and meals? Define, measure, and discuss the price elasticities.
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- Q. 4. Determine and discuss the impact of diesel prices on fuel revenues and the impact of gasoline prices on fuel revenues. What is the relationship between meal prices and meals? Define, measure, and discuss the price elasticities. HINT: Find price elasticity of demand by multiplying the slope of the regression line from Excel by the mean real price then divide by the mean quantity demanded.The coefficient of income in a regression of the quantity demanded of a commodity on price, income and other variables is 10. Calculate the income elasticity of demand for this commodity at income of $10,000 and sales of 80,000 units. What would be the income elasticity of demand if sales increased from 800,000 to 900,000 units and income rose from $10,000 to $11,000? What type of good is this commodity?Comparative Static COMPUTATIONAL QUESTIONS 5. The demand function for good X is In Q -a+bln P,+cln M+e , where Px is the price of good X and M is income. Least squares regression reveals that â = 7.42, i --2.18, and = 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 clastic or inclastic. 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. Obtaining Elisticities From Demanc Function Answer a. The own-price elasticity of demand is -2.18, so demand is elastic. b. The income elasticity of demand is 0.34, so X is a nomal good.
- The Globe and Mail (December 16, 1997) reported that milk consumption declined following price increases: “Since the early 1980s, the price of milk in Canada has increased 22 per cent. As prices rose, the demand for milk fell off. Total [consumption] of milk on a per capita basis dropped . . . to 2.62 hectolitres in 1995 from 2.92 hectolitres in 1986.” Use these data to estimate the price elasticity of demand for milk. (1.5marks) 0.49 milk is inelastic According to your estimate, what happens to milk producers’ revenue when the price of milk rises? (1 mark) When the price of milk rises milk producers revenue drop because the demand for milk dropped Why might your estimate of the elasticity be unreliable? (Hint: Notice that The Globe and Mail is careless about the distinction between demand and quantity demanded.) (1 mark)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.There is a functional relationship between Price of an IPod Touch, � and Weekly Demand,
- The price of a package of Reese's Peanut Butter Cups rises from $1.00 to $1.25. As a result, the weekly quantity of Reese's demanded falls from 10,000 to 9,000 packages. Calculate the price elasticity of demand using the average of the initial and new prices and quantities as the basis for figuring the percentage changes.The price of Pepsi changes from $4.75 to $1.00; initialy Yuval consumed 7 cups of pepsi per week and now consumes 18 cups of pepsi per week. Indicate whether the changes are negative or positive and keep 2 decimals. What is the percentage change in price? What is the percentage change in quantity? What is the Price Elasticity of Demand? (Enter a positive number) In this example, pepsi is an OElastic Olnelastic OUnitary Elastic good FI % %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…
- During a recent 30-day period, the Squish restaurant sold 600 Ocean Delights at a price of $6.45. During the next 30-day period, the price was increased to $6.95, and 400 Ocean Delights were sold. Calculate the price elasticity of demand, and indicate if demand is elastic or inelastic multiple question 1, elastic 4.125, elastic 4.125, inelastic 1, inelasticNeed number 4 and 5 answered Elasticity: What is elasticity? Elasticity refers to the concept that provide information about the sensitivity or responsiveness of one variable to another. What is Price Elasticity of Demand? Price elasticity of demand is the responsiveness of consumers in term of quantity demanded with respect to the price change. It explains that how much quantity demanded changes with the change in the price by 1percent. What is the formula that we will use to calculate it? The formula to calculate price elasticity of demand would be: =Percentage change in quantity demanded/percentage change in price After calculating the Coefficient of Price Elasticity of Demand, what are the rules we use to characterize that price range? (i.e., What importance does the number one play?) What is the total revenue test?The demand equation for cans of chicken is Qd= 60-3p Suppose the price of a can of chicken increases from $5 to $10. The price elasticity of demand is _________ (use decimals if necessary). We classify this price elasticity of demand as ____ over the $5 to $10 price change. A. Elastic B.Inelastic C.Unit elastic