Compute the income elasticity also elucidate how

Reference no: EM1327367

A book publisher has the following demand function for the firm's novels (Qx):
Qx = 12,000-5,000Px + 5I + 500Pc
where Px is the price charged for the firm's novels, I is income per Capita, and Pc is the price of books from competing publishers.
Assume that the initial values of Px, I, and Pc are $5, $10,000, and $6, respectively

(A) Calculate the price elasticity and determine what effect a marginal (small) price increase from the initial price would have on total revenues?

(B) Calculate the income elasticity and evaluate how sale of the novels would change during a period of rising incomes?

Reference no: EM1327367

Questions Cloud

Time value of money-loan amortization schedule : Mary has decided to borrow $120,000. The terms of the loan are 6% over the next 4 years. Prepare a loan amortization schedule which shows the 4 payments of Mary's loan.

Find out the minimum-cost spanning trees : Find out the shortest paths from S to all the other nodes in the graph using Dijkstra Algorithm.

Interior department currently announce that it will increase : Interior Department currently announced that it will increase the entrance fees at Yellowstone National Park in order to increase park revenues.

Calculating time value of money : Your annual salary is $100,000. Every year for the next 30 years you plan to save 10 percent of your salary and invest-How much will you have in your account at the end of 30 years if your salary grows at 4 percent per year?

Compute the income elasticity also elucidate how : Compute the income elasticity also elucidate how sale of the novels would change during a period of rising incomes.

Time value of money in economic decisions : Please describe why the time value of money is significant in an economic decision and how NPV and payback period are used in business to incorporate the time value of money into operational decision.

Is the company charging the optimal price for the product : Is the company charging the optimal price for the product. Demonstrate how you know.

Explain infrastructures that influence strategy e-commerce : Explain Four infrastructures that influence strategy in an e-commerce company and what other challenges might an e-commerce manager face

Finance-evaluating value : Mention the pertinent information on the bond you chose and then calculate the price of one bond from both companies. Based on the credit rating, which company do you believe the bank feels more secure will pay back the loan? Explain your answer.

User Account

All Pages