Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows: QD = 89, 830 – 40Ps + 20Px + 15P, + 21 + 0.001A + 10W Where, QD = quantity purchased, Ps = the price of smooth sailing sailboats, Px= the price of Company X's sailboat, Py = the price of Company Y's motorboat, I= per capita income in dollars, A = dollars spent on advertising, and W = number of favorable days of weather in the southern region of the United States. a) Suppose that Ps = $9,000, Px = $9,500, Py= $10,000, I = $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point. b) Is E, elastic, inelastic, or unitary elastic in part (a)? Justify?

Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows: QD = 89, 830 – 40Ps + 20Px + 15P, + 21 + 0.001A + 10W Where, QD = quantity purchased, Ps = the price of smooth sailing sailboats, Px= the price of Company X's sailboat, Py = the price of Company Y's motorboat, I= per capita income in dollars, A = dollars spent on advertising, and W = number of favorable days of weather in the southern region of the United States. a) Suppose that Ps = $9,000, Px = $9,500, Py= $10,000, I = $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point. b) Is E, elastic, inelastic, or unitary elastic in part (a)? Justify?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 2E: The price elasticity of demand for air travel differs radically from first-class (1.3) to...

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Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows: QD= 89,830-40PS+20Px+15Py+2I+0.001A+10W Where, QD = quantity purchased, PS = the price of smooth sailing sailboats, PX = the price of Company X’s sailboat, PY = the price of Company Y’s motorboat, I = per capita income in dollars, A = dollars spent on advertising, and W = number of favorable days of weather in the southern region of the United States. Suppose that PS = $9,000, PX = $9,500, PY = $10,000, I = $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point. Is elastic, inelastic, or unitary elastic in part (a)? Justify?
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Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows: = 89, 830 – 40P, + 20PX + 15P, + 21 + 0.001A + 10W Where, QD = quantity purchased, Ps = the price of smooth sailing sailboats, Px= the price of Company X's sailboat, Pr= the price of Company Y's motorboat, I= per capita income in dollars, A = dollars spent on advertising, and W = number of favorable days of weather in the southern region of the United States. a) Suppose that Ps = $9,000, Px = $9,500, Pr = $10,000, I = $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point. b) Is E, elastic, inelastic, or unitary elastic in part (a)? Justify?
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