Purchase Solution

Demand and Forecasting

Not what you're looking for?

Ask Custom Question

Demand and Forecasting

Purchase this Solution

Solution Summary

Demand and Forecasting are emphasized.

Solution Preview

See the attached file. Thanks

Chapter 3 Demand and Forecasting

3. The Olde Yogurt Factory reduced the price of it popular Mmmmm Sundae from $2.25 to $1.75. As a result, the firm's daily sales of these sundaes have increased from 1500 per day to 1800 per day. Compute the arc price elasticity of demand over this price and consumption quantity range.
Arc price elasticity of demand = (Q2-Q1)/(Q2+Q1) *(P2+P1)/(P2-P1)
=(1800-1500)/(1800+1500)*(1.75+2.25)/(1.75-2.25)
=-0.7273

8. The demand function for bicycles in Holland has been estimated to be
Q=2,000+15y-5.5p

where Y is income in thousands of euros, Q is the quantity demanded in units, and P is the price per unit. When P= 150 euros and Y=15(000) euros, determine the following:

a. Price elasticity of demand
First we find the Q at P=150 and Y=15000
Q=2000+15*15-5.5*150=1400
Price elasticity of demand = dQ/dP*P/Q = -5.5*150/1400=-0.5893

b. Income elastcity of demand
Income elasticity of demand = dQ/dI * I/Q = 15*15/1400=0.1607

14. A study of the long-term income elasticity of demand for housing by renters is in the range of 0.8 ...

Purchase this Solution


Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.