Demand for bicycles in the Netherlands is given by

Q = 2, 000 + 15Y â 5.5P
where Y is income in thousands of euros, Q is the quantity demanded of bicycles, and P is the

price per unit in euros. When P = 150 and Y = 15 (i.e., 15,000 euros), find, without using derivatives, (a) Price elasticity of demand (b) Income elasticity of demand

Describe the demand for bicycles in Holland based on your answers above. Is demand elastic? Are bicycles a normal or an inferior good? Luxury or a necessity? How do you think this may compare to demand for bicycles in the US?

answer

watching

852

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Nelly StrackeLv2

1 Apr 2018

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

A firm has estimated the following demand function for its product:

Q = 100 - 5P + 5I + 15A

Where Q is the quantity demanded per month in thousands, P is product price, I is an index of consumer income, and A is advertising expenditures per month in thousands. Assume that P = $200, I = 150, and A = 30. For simplicity in calculating the results, use the point elasticity formulas to complete the calculations indicated below.

(i) Calculate the quantity demanded.
(ii) Calculate the price elasticity for demand. Is demand elastic, inelastic, or unit elastic?
(iii) Calculate the income elasticity of demand. Is the good normal or inferior?
(iv) Calculate the advertising elasticity of demand.

champagnescorpion326

From the scenario for Katrinaâs Candies, examine the procedure Herb will use to estimate the "demand model" for this product and comment on the expected price elasticity, income elasticity, and cross price elasticity of demand. That is, do you expect demand to be price elastic or inelastic? Will the income elasticity suggest Katrina Candies is a luxury or a necessary good? And, is there likely to be a strong cross price elasticity with the other products that Herb included in his demand model? Explain your answers. What can you determine about consumer demand for a product whose estimated demand elasticities are as follows: Price Elasticity of demand is -0.85 Income Elasticity of demand is 2.5 Cross Price Elasticity of demand with this product and your product is -2 I would like you to think about this simple formula for predicting the change in total revenue when there is a given percentage change in price. Using the example above, if ED (price elasticity of demand) is -.85, then a 10% increase in price will cause the quantity demanded to fall by 8.5%, (-8.5% / 10% = -.85). The Formula for Predicting % Changes in Total Revenue is: %ÎTR = %ÎQ + %ÎP where TR = Total Revenue, Q is Quantity Demanded and P = price. Using this formula, what would be the % Î in TR if ED is -.85 and the %ÎP is 10%?

lilaccattle807

FILL IN THE BLANKS

Demand for this good is (enter inelastic, elastic or unitary elastic) with respect to price.

This is a (enter normal or inferior) good as income elasticity is (enter less than, greater than or equal) zero, and it is a (enter necessity or luxury) good as income elasticity is (enter less than, greater than or equal) one.

Widgets and gadgets are (enter complements or substitutes), because cross-price elasticity is (enter positive or negative). Widgets and gadgets (enter are or are not) good substitutes because cross-price elasticity is (enter less than, greater than or equal) (enter the numerical value).