Approximate percentage increase in quantity demanded

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Reference no: EM13745830

Given the following demand function: Q = 2.0 P?1.33 Y2.0 A.50 where Q = quantity demanded (thousands of units) P = price ($/unit) Y = disposable income per capita ($ thousands) A = advertising expenditures ($ thousands)

Determine the following when P = $2/unit, Y = $8 (i.e., $8000), and A = $25 (i.e., $25,000).

a. Price elasticity of demand.

b. The approximate percentage increase in quantity demanded if disposable income percentage increases by 3%.

c. The approximate percentage increase in quantity demanded if advertising expenditures are increased by 5 percent.

Reference no: EM13745830

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