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Economics - Demand Problems/Calculations

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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).

Solution Summary

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

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