Computing price-income and advertising elasticity

Reference no: EM1367180

A firm has estimated the following demand function for its product:

Q = 8 - 2P + 0.10I + A

Q is quantity demanded per month in thousands, P is product price, I is an index of consumer income, and A is advertising expenditures per month in thousands.

Assume P=$10, I=100, and A=20.

Based on this information, calculate values for:

a) quantity demanded, and price elasticity of demand

b) income elasticity of demand, and advertising elasticity

(Use the point formulas to complete the required elasticity calculations)

Reference no: EM1367180

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