Compute to three decimal places. (See attached) Initial values are:      PX = $9500     PY = $10000   I = $15000      A = $170000   W = 160 This function is:        Qs = 89830 -40PS +20PX +15PY +2I +.001A +10W

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Chapter3: Demand Analysis
Section: Chapter Questions
Problem 6E
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Compute to three decimal places. (See attached)

Initial values are:      PX = $9500     PY = $10000   I = $15000      A = $170000   W = 160

This function is:        Qs = 89830 -40PS +20PX +15PY +2I +.001A +10W

5.(a). 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:
ƏQs W
aw Qs
EA
=
5.(b). 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:5.(a). 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: ƏQs W aw Qs EA = 5.(b). Does this elasticity coefficient indicate that the demand for Smooth Sailing boats is relatively responsive to changes in income? Explain why or why not.
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