Reference no: EM131238816
Joy's Frozen Yogurt shops have enjoyed rapid growth in northeastern states in recent years. From the analysis of Joy's various outlets, it was found that the demand curve follows this pattern:
Q = 200 - 300P + 120I + 65T - 250Ac + 400 Aj where
Q = number of cups served per week,
P = average price paid for each cup,
I = per capita income in the given market (thousands),
T = average outdoor temperature,
Ac = competition's monthly advertising expenditures (thousands) and
Aj = Joy's own monthly advertising expenditures (thousands)
One of the outlets has the following conditions: P=1.50, I=10, T=60, Ac=15, Aj=10.
1. Which of the following represents the demand curve for this market?
Qd = 200 - 300P
Qd = 4800 - 300P
Qd = 5100 - 300P
Qd = 5550 - 300P
2. What will be the effect of a $5 thousand increase in the competitor's advertising expenditure?
Quantity demanded would increase by $5000.
Quantity demanded would decrease by $5000.
Quantity demanded would increase by $1250.
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