Q=5,000 - 4,000P + 0.02Pop + 0.25I +1.5A?

Question

A. Determine the demand in which P=$10,Pop=1 million persons, I=$60,000 and A=$10,000

B. Calculate the level of demand increases annual advertising expenditures from $10,000 to $15,000.

C. Calculate the demand curves in parts A and B

Q=5,000 - 4,000P + 0.02Pop + 0.25I +1.5A

Q=quantity, P=price ($), Pop=population, I=disposable income per household ($), A=advertising expenditures ($)

Answer 1

A: Q=15'000

B:

Q(A=10'000)=15'000

Q(A=15'000)=22'500

ΔQ=22'500-15'000= $+7'500

C:

Q(P; A=10'000) = 55'000-4'000P

Q(P; A=15'000) = 62'500-4'000P