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Estimating demand function for Chevrolets

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Demand Analysis:

Qc=100,000 - 100 Pc + 2,000N + 50I + 30Pf - 1,000 Pg + 3A + 40,000P1
Where Qc= quantity demanded per year of Chevrolet automobiles
Pc= Price of Chev. automobiles in dollars
N= population of the USA in millions
I= per capita disposible income in dollars
Pf= price of Ford automobiles in dollars
Pg= real price of gasoline in cents per gallon
A= advertising expenditures by Chev. in dollars per year
P1= credit incentives to purchase Chevrolets, in percentage points below the rate of interest on borrowing in the absence of incentives

Assume that the average volume of the independent variables are N=225 million, I= $12,000, Pf= $10,000 Pg= 100 cents, A= $250,000, and P1= 0, incentives are phased out

a. Find the equation of the new demand curve for Chevrolets?
b. If Pc= $10,000, find the value of Qc

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Solution Summary

Solution describes the steps for converting demand equation for Chevrolets and estimating its demand for a given price.

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Solution:

a. find the equation of the new demand curve for Chevrolets?
Qc=100,000 - 100 Pc + ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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