Qe = 49,714.29 - 30.7692Pge + 6.984Pbe + 1,180Ag - 950Ab + 0.0825Ye for the east
ID: 2366710 • Letter: Q
Question
Qe = 49,714.29 - 30.7692Pge + 6.984Pbe + 1,180Ag - 950Ab + 0.0825Ye for the eastern market, where Q refers to the number of units sold; P refers to price level; A refers to advertising budgets of the firms (in millions); Y refers to average disposable income levels of the potential customers; the subscripts w and e refer to the western and eastern markets, respectively; and the subscripts g and b refer to GGC and BLG, respectively. GGC expects to spend $1.5 million on advertising this coming year and expects BLG to spend $1.2 million on advertising. The average household disposable income is $55,000 in the western suburbs and $25,000 in the eastern suburbs. GGC does not expect BLG to change its price from last year, since it has already distributed its glossy brochures (with the $2,100 price stated) in both suburbs, and its TV commercial has already been produced. GGCExplanation / Answer
FOLLOW THIS : Consider the market for sales of ice cream cones at a state fair. The table below gives the market quantity demand, given that all sellers at the fair charge the same price. Price of Ice Cream ($) Quantity Demanded (millions) 0.50 16 1.00 13 1.50 10 2.00 7 2.50 4 3.00 1 You can calculate the market price elasticity of demand using the information contained in the table. For example, suppose you decide to calculate the price elasticity of demand at $2.00 by examining a price decrease from $2.00 to $1.50 per cone. In this case, the demand for ice cream would increase from 7 million cones to 10 million cones. You can use these figures to calculate the price elasticity of demand as follows: This implies the following: The price elasticity of demand for ice cream cones at a price of $2.00, according to the demand schedule provided, is