a)
To determine the
a)
Answer to Problem 10E
The final result derived from the calculation for price elasticity of demand for the year 2006 and 2007 is -0.21.
Explanation of Solution
The price elasticity of demand for the year 2006 and 2007 can be calculated as follows:
% change in quantity demanded:
% change in price:
Price elasticity of demand:
b)
To determine the income elasticity of demand for the year 2007 and 2008.
b)
Answer to Problem 10E
The final result derived from the calculation for income elasticity of demand for the year 2007 and 2008 is -3.53.
Explanation of Solution
% change in quantity demanded:
% change in income:
Income elasticity of demand:
c)
To determine the sales
c)
Answer to Problem 10E
The final result derived from the calculation for sales forecast for the year 2009 is 316.
Explanation of Solution
Sales forecast for the year 2009 has been calculated against the income and price elasticities for the previous years and has been calculated as 316 that is a reduction when compared to the previous year.
d)
To determine the Sales for the year 2009, with an increase in the price and income levels.
d)
Answer to Problem 10E
The final result derived from the calculation the Sales for the year 2009, with an increase in the price and income levels is 320.
Explanation of Solution
Sales forecast for the year 2009 has been calculated against the income and price elasticities for the previous years and has been calculated as 320 that is a reduction when compared to the previous year.
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Chapter 3 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning