Evaluate the demand function, Microeconomics

Lab Exercise 1. Taco Del Mar has completed a study of weekly demand for its tacos in Washington State's regional markets.  The study developed the following demand function:

Q = 400 - 1,200P + 0.8A + 55Pop + 800Pc

where   Q is the number of tacos sold per store per store per week;

    A is the level of local advertising expenditure in dollars;

    Pop is the local population in thousands; and

    Pc  is the average taco price of local competitors.

For the typical Taco Del Mar outlet, P = $1.35, A = $1,000, Pop = 40, and Pc = $1.00

Use the Lab 3 Excel file and program the elasticity worksheet (using the appropriate formulas) to answer the following:

a.  Estimate the weekly sales for the typical Taco Del Mar (given the above information).

b.  What is the current own price elasticity for Taco Del Mar tacos?

c.  Should Taco Del Mar raise its taco prices?  Discuss why or why not.

d.  Using Excel calculate the marginal revenue if Taco Del Mar increases its taco price to $1.50.

e.  Calculate the advertising elasticity for Taco Del Mar tacos.

f.  Use the advertising elasticity to predict the change in Q from a 1% increase in advertising expense.
g.  Use your demand function to calculate the change in Q from a 1% increase in advertising expense.

h.  Calculate the cross price elasticity of local taco competitors.

i.  Are the competitor tacos complements or substitutes?  Discuss why or why not.

Posted Date: 4/12/2013 3:43:28 AM | Location : United States

Related Discussions:- Evaluate the demand function, Assignment Help, Ask Question on Evaluate the demand function, Get Answer, Expert's Help, Evaluate the demand function Discussions

Write discussion on Evaluate the demand function
Your posts are moderated
Related Questions
Inflation-Unemployment Trade-off under Adaptive Expectations : By the late 1960s, the inverse relation between inflation and unemployment as suggested by the Phillips curve was

Suppose Dlamini has R5 000 to spend on trousers and shirts. The price of trousers is R500 each and that of shirts is R312.50 each. 6.1 Use the information and calculate consumer eq

Question 1: Tourism is often seen as a way of generating income, particularly foreign exchange. The economic spin-off effects are viewed as the most important aspect of touris

Igora''s pizzeria want to know if it should stay open this spring. Total Revenue will be $ 12,000 per week and Total Cost will be $ 18,000 per week. The fixed cost of running the b

Consider a hypothetical nation, Solowland, which were in the steady state. We consider a constant return to scale production function based on two production factors, labor and cap

THEORY OF REVEALED PREFERENCE: If consumer's taste and preferences do  not change, then observation of her market behaviour or, actual act of choice between the commodity sets

Volume of Trade: It relates to the size of international transactions. Since a large number of commodities enter in international transactions and their aggregate can be found

give a detailed discussion on the term economics of scale as applied to economics, highting examples,limitation,and original of economics of scale.