# Essay Examples on Shoreline Community College

### When P 500 C 600 I 5500 A 10000 and M 5000 using regression Equation

Question 1 When P 500 C 600 I 5500 A 10000 and M 5000 using regression equation QD 5200 42 500 20 600 5 2 5500 0 2 10000 0 25 5000 17650 Price elasticity P Q dQ dP From regression equation dQ dP 42 So price elasticity EP P Q 42 42 500 17650 1 19 Likewise EC 20 600 17650 0 68 EI 5 2 5500 17650 1 62 EA 0 20 10000 17650 0 11 EM 0 25 5000 17650 0 07 Question 2 Price elasticity is 1 19 This clearly shows a 1 increase in the price of the product makes the quantity demanded to drop by 1 19 Therefore the demand of the product is elastic Consequently increase in price may discourage the customers and make them go away Cross price elasticity is 0 68 If the competitor s product price increases by 1 then quantity demanded of the product will also rise by 0 68 This product is fairly inelastic to the proce of the competitor and there is no reason to be worried about the competitor as their pricing will have no impact on the sales Income elasticity is 1 62 This shows that a 1 increase in the average area income will raise the quantity demanded by 1 62 With this point the product is elastic and the company will have to make a decision to raise the price if the average income also rises

1 pages | 352 words
Save