Question: ELASTICITY EXERCISE Name _____________________________11) Due ____________ Please show work in detail. All questions utilize the multivariate demand function for Smooth Sailing sailboats in C6 on

ELASTICITY EXERCISE

Name _____________________________11) Due ____________ Please show work in detail.

All questions utilize the multivariate demand function for Smooth Sailing sailboats in C6 on text page 83.Compute to three decimal places.

Initial values are: PX = $9500 PY = $10000 I = $15000 A = $170000 W = 160

This function is: Qs = 89830 -40PS +20PX +15PY +2I +.001A +10W

1.(a) Use the above to calculate thearc price elasticity of demand between PS = $8000 decreasing to PS = $7000. The arc elasticity formula is:

AQ AP P1 + P2 Q1 + Q2image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

AQ AP P1 + P2 Q1 + Q2

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