After a careful statistical analysis, the Chidester Company concludes the demand function for its product is Q = 500 - 3P + 2Pr + 0.1I where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000. What is the income elasticity of demand for the fi rm’s product? a. -0.5405 b. 0.5405 c. 1.0811 d. 0.5825
After a careful statistical analysis, the Chidester Company concludes the demand function for its product is Q = 500 - 3P + 2Pr + 0.1I where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000. What is the income elasticity of demand for the fi rm’s product? a. -0.5405 b. 0.5405 c. 1.0811 d. 0.5825
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter4: Estimating Demand
Section: Chapter Questions
Problem 6E
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Question
After a careful statistical analysis, the Chidester Company concludes the demand function for its product is
Q = 500 - 3P + 2Pr + 0.1I
where Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = $10, Pr = $20, and I = $6,000.
What is the income
a. |
-0.5405
|
|
b. |
0.5405
|
|
c. |
1.0811 |
|
d. |
0.5825 |
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