**Educational Website Content: Price Elasticity and Demand Analysis****Initial Values:**- $ P_M = \$20000 $- $ P_G = \$1.00 $- $ I = \$15000 $- $ A = \$10000 $**Function:**\[ Q_T = 200 - 0.01P_T + 0.005P_M - 10P_G + 0.01I + 0.003A \]---### 1. Arc Price Elasticity of Demand**(a)** Use the formula to calculate the arc price elasticity of demand between $ P_T = \$20000 $ decreasing to $ P_T = \$10000 $.- **Formula:** \[ E_p = \frac{\Delta Q}{\Delta P} \cdot \frac{P_1 + P_2}{Q_1 + Q_2} \]**(b)** Judging from the computation in (1a), do you expect the revenue from the price decrease to $10000 to increase, remain the same, or decrease relative to the revenue at the price of $20000? Explain your choice.---### 2. Point Price Elasticity of Demand (Toyota)**(a)** Calculate the point price elasticity of demand for Toyotas at $ P_T = \$20000 $ (which should make $ Q_T = 270 $). - **Formula:** \[ E_p = \frac{\partial Q_T}{\partial P_T} \cdot \frac{P_T}{Q_T} \]**(b)** Does this elasticity indicate that Toyota demand is relatively responsive to changes in the Toyota price? Explain why or why not.---### 3. Cross-Price Elasticity with Gasoline**(a)** Calculate the point gasoline cross-price elasticity between $ P_G $ and Toyota demand ($ Q_T $). Assume the price of gasoline is $ P_G = \$1.00 $. Use $ P_T = 20000 $ (which should make $ Q_T = 270 $).- **Formula:** \[ E_{TG} = \frac{\partial Q_T}{\partial P_G} \cdot \frac{P_G}{Q_T} \]**(b)** Does this elasticity indicate that the demand for Toyotas is relatively responsive to

a) Elasticity is defined as the degree of responsiveness in the quantity demanded of the good because of the change in price.QT=200-0.01×20000+0.005×20000-10×1+0.01×15000+0.003×10000QT=200-200+100-10+150+30QT=100-10+150+30QT=250-10+30Q1T=270 at PT=$20000QT=200-0.01×10000+0.05×20000-10×1+0.01×15000+0.003×10000QT=200-100+100-10+150+30QT=200-10+150+30Q2T=370 at PT=$10000dQ=Q2T - Q1TdQ=370 - 270=100dP=10000-20000=-10000dQ/dP= 100/(-10000)= -0.01Q1+Q2=270+370=640P1+P2=20000+10000=30000Ep= -0.01×(30000/640)=-0.46875b) Since the elasticity of demand is less than one so the demand is inelastic and a decrease in price will result in a less than proportional increase in quantity demanded. So the total revenue will decline.a)QT=200-0.01×20000+0.005×20000-10×1+0.01×15000+0.003×10000QT=200-200+100-10+150+30QT=100-10+150+30QT=250-10+30Q1T=270 at PT=$20000QT=200-0.01×10000+0.05×20000-10×1+0.01×15000+0.003×10000QT=200-100+100-10+150+30QT=200-10+150+30Q2T=370 at PT=$10000dQ=Q2T - Q1TdQ=370 - 270=100dP=10000-20000=-10000dQ/dP= 100/(-10000)= -0.01Ep= -0.01×(20000/270)=-200/270=-0.7407b) Since the demand is inelastic still demand is responsive to the change in price though less than proportional as the elasticity is less than 1.a) Cross-price elasticity measures the degree of responsiveness in the quantity demanded of the good concerned due to the change in price of the related good.dQT/dPG= -10ETG=-10×(1/270)= -10/270= -0.0370b) Since the cross-price elasticity is inelastic thus the demand for Toyota is relatively inelastic with respect tobthe gasoline prices. This because the value of elasticity is less than 1, so a 1 percent decrease in gasoline prices would result in less than proportional increase in the demand for Toyota cars. *Note: Since we are required to provide solution for only three sub-parts of the question. So for additional solution please post the question seperately.