Calculating cross price elasticity of demand

Assignment Help Macroeconomics
Reference no: EM1312424

The demand function for VCRs has been estimated to be Qv = 123 - 1.7Pt + 46 Pm - 2.1Pv -5M, where Qv is the quantity of VCRs,Pt is the price of a videocassette,  pmis the price of a movie, Pv is the price of a VCR, and M  is income. Based on this information, answer the following questions

  1. Are VCRs normal or inferior goods?
  2. Are movies substitutes or complements for VCRs?
  3. What additional information is needed to calculate the price elasticity of demand for VCRs?

Reference no: EM1312424

Questions Cloud

Computation of expected return of your portfolio : Computation of expected return and the volatility of your portfolio and Your plan is to borrow another $50,000 at an interest rate of 5% per year for one year
Determination of shut down point : Provide a report to management of the firm as to whether or not it should continue to operate at a loss?
Probability of choosing area code ends with odd number : Determine the probability of choosing the area code at random which ends in the odd number if first digit cannot be 1 or 0?
Impact of deflation on forex rates : Assume the US economy experiences deflation. Trace through the impact on the US macroeconomic variables to the effect on the FOREX rates.
Calculating cross price elasticity of demand : The demand function for VCRs has been estimated to be Qv = 123 - 1.7Pt + 46 Pm - 2.1Pv -5M, where Qv is the quantity of VCRs,Pt is the price of a videocassette,  pmis the price of a movie, Pv is the price of a VCR, and M  is income.
Describing the modern eating habits : Discuss the differences you have noticed between old and new Food Pyramid. Provide your opinion if you believe new Food Pyramid will be successful in modifying the eating habits of Americans or not.
Frequency distribution to create a probability distribution : Use frequency distribution to create a probability distribution, determine the (b) mean,(c) variance.
Computation of present value of an investment : Computation of present value of an investment and present value if you receive these payments at the beginning of each year rather than at the end of each year
Different observational study designs : Complete the following table titled 'Applications of Different Observational Study Designs' indicating for every objective under the pertinent study design if objective is 'suitable' or 'not suitable'.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd