- #1

DreamBell

**Calculation on Price Elasticity of Demand problem ... Need Advices ...**

Give following demand function:

Q = 2.0 P^-1.33Y^2.0A^0.50

Q = Quantity demanded (Thousads of units)

P = Prices ($/Unit)

Y = Disposable income per capita ($ thousands)

A = Advertising expenditures ($ thousands)

When P = $2/unit, Y = $8 (i.e. $8000), and A = $25 (i.e. $25000)...

1. Price Elasticity of demand

2. The approximate percentage increase in demand if disposable income percentage increased by 3%.

3. The approximate percentage increase in demand if Advertising Expenditure are increased by 5%.

Well, i really not so understand how to resolved the ab0ve question. Is that i need to draft a graft in order to get the answer ?

Hopefully hav some one professional here to guide me on this kind of question .

regards,

Dream Bell