The Ice Cream Parlor is the only ice cream parlor in Smithtown. Michael, the son of the
Question:
The Ice Cream Parlor is the only ice cream parlor in Smithtown. Michael, the son of the owner, has just come back from college, where he majors in business administration. In his course in managerial economics, Michael has just studied demand analysis, and he decides to apply what he has learned to estimate the demand for ice cream in his father’s parlor during his summer vacation.
Using regression analysis, Michael estimates the following demand function: QI = 120 − 20PI
where the subscript I refers to ice cream portions served per day in his father’s parlor, and PI is the dollar price.
Find the point price elasticity of demand if the P = $5. (You answer should be a negative whole number.)
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward