Explore BrainMass

Explore BrainMass

    Demand function

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Given the following demand function:
    Q = 2.0 P-1.33 Y2.0 A0.50

    Q = quantity demanded (thousands of units)
    P = price ($/unit)
    Y = disposable income per capita ($ thousand)
    A = advertising expenditures ($ thousand)

    Determine the following when P = $2/unit, Y = $8 (i.e., $8000), and A = $25 (i.e., $25,000)
    (a) Price elasticity of demand

    (b) The approximate percentage increase in demand if disposable income percentage increases by 3%.

    (c) The approximate percentage increase in demand if advertising expenditures are increased by 5 percent.

    © BrainMass Inc. brainmass.com October 10, 2019, 1:09 am ad1c9bdddf

    Solution Preview

    I will assume that your demand function looks like this (if not contact me)

    Q = 2(P^1.33)(Y^2)(A^0.5)

    first we plug in Y = 8 and A = 25

    Q = 640(P^1.33)

    dQ/dP = ...