Economic in calculation Questions Inquiry

In summary, the conversation discusses the point price elasticity of demand for XY when given specific values for P, Px, U, A, and N. The point elasticity is calculated by taking the derivative of the demand function with respect to P, which is 40 in this case. The conversation also mentions the point cross elasticity of demand, which is calculated similarly by taking the derivative with respect to Px, which is 17.5. The person in the conversation expresses a lack of understanding in economics and calculus and seeks help in understanding these concepts.
  • #1
DreamBell
Qd = 3500-40P + 17.5Px + 670U + 0...9.A + 6500N

P=monthly rental price of XY machine
Px= monthly rental price of old town XY machine (Largest competitor)
U = current unemployment rate in the 10 largest metropolitan areas.
A=Advertising expenditures for XY machine
N=fraction of the Singapore population btw ages 10 to 30

Question
*******
1. What is the point price elasticity of demand for XY when P=$150, Px=$100, U=0.12, A=$200000 and N=0.35.

2. what is the point cross e;asticity of demand with respect to XY machine for values of the independent variables given in part 1.
 
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  • #2
1. Price elasticity of demand is defined as the change in demand for good xy in response to a change in price for the good, and can be found by taking dQD/dP * P/Q. In your case, Qd'(P) = 40, easily enough. So Ep(xy) = 40 * P/Qd(xy). This function can be easily solved at the point P = 150 using the values given by the problem.

2. Cross price elasticity of demand is defined as the change in demand for good xy in response to a change in price for another good, say x. This is found the exact same way, except you are taking the derivative with respect to Px instead of P. It's another very easy derivative; Qd'(Px) = 17.5. So Ecp(xy) = 17.5 * Px/Qd(xy).
 
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  • #3
Hi there,
Thanks a lot for the helping ...
i was just cracking head to find some one to teach me in Eco Cal question.
Maybe don't have any basic in Eco ...

May i know why Qd'(P) = 40 ?
How u calculate and get the 40 ?
 
  • #4
well ... can i said so :

Qd = 3500-40(150)+17.5(100)+670(0.12)+0.0090(200000)+6500(0.35)
= 3405.4

1. 40 * (150/3405.4) = 1.7619

2. 17.5 * (100/3405.4) = 0.519

Pls correct me if I'm wrong ...
Thanks a lot 1st you ~

regards,
DreamBell
 
  • #5
DreamBell said:
Hi there,
Thanks a lot for the helping ...
i was just cracking head to find some one to teach me in Eco Cal question.
Maybe don't have any basic in Eco ...

May i know why Qd'(P) = 40 ?
How u calculate and get the 40 ?

Have you not taken any calculus? It's the derivative of a function with 1 variable (called the power rule, iirc). The formula for d(x) is A*B*x^B-1 given the formula Ax^B.

You'll need at least an introduction to calculus before you do econometrics.
 
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  • #6
Well , i think i need some time to pick up in Econ subject ...
But really hoe can get more helps here so that I'm able to cope with subject Econ ...
Thanks a lot ~
 
  • #7
Please post this in the approproiate Homework Help forum.
 

1. What is economic calculation?

Economic calculation is the process of using mathematical and statistical methods to analyze and measure economic data in order to make informed decisions about resource allocation, production, and consumption.

2. Why is economic calculation important?

Economic calculation is important because it allows individuals, businesses, and governments to assess the costs and benefits of different economic choices and make informed decisions that can lead to efficient resource allocation and economic growth.

3. What are some key methods used in economic calculation?

Some key methods used in economic calculation include cost-benefit analysis, opportunity cost analysis, regression analysis, and input-output analysis.

4. How does economic calculation impact decision-making?

Economic calculation provides a systematic approach to decision-making by quantifying and comparing the costs and benefits of different options. This allows decision-makers to identify the most efficient and effective course of action.

5. What are the potential limitations of economic calculation?

Some potential limitations of economic calculation include the difficulty in accurately predicting future economic conditions, the subjectivity of assigning values to costs and benefits, and the possibility of overlooking non-monetary factors in decision-making.

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