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Economics - Demand Problems/Calculations

Economics - Demand Problems/Calculations. See attached file for full problem description.

1. Assume you have to analyze the following data provided to you from the Accounting Department.
a) From Column A and E in the demand schedule above, what is the price elasticity of demand when our
price is between $1600 and $1450 per unit, average income equals $40,000, and another company
charges a price that is $100 higher than ours'? Tells me what this coefficient means.
b) From Column A and D in the demand schedule above, what is cross-price elasticity of demand when
our price is $1500 per unit and average income equals $40,000'? Tells me what this coefficient means.
c) From Column A and B in the demand schedule above, what is income elasticity of demand when our
price is $1500 per unit and the price of another company is $100 more than ours? Interpret the coefficient.
d) From Column A and F what is the average cost per unit when our price is $1500 per unit and average
income equals $40,000? In addition, what are total fixed and variable costs at this price'?
e) Take the data that you used in (a) above and estimate a demand equation. Interpret the results of the
regression with as much detail as you can. (Attach any computer output as you deem necessary).

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Solution Summary

An analysis of demand based on info provided from an accounting department.

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