Economic in calculation Questions Inquiry

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Discussion Overview

The discussion revolves around calculating price elasticity and cross-price elasticity of demand for a specific economic model involving the XY machine. Participants explore the application of calculus in economics, specifically in the context of demand functions and elasticity calculations.

Discussion Character

  • Homework-related
  • Mathematical reasoning
  • Technical explanation

Main Points Raised

  • Post 1 presents a demand function and asks for the point price elasticity and cross-price elasticity of demand at specified values.
  • Post 2 defines price elasticity of demand and cross-price elasticity, providing formulas for their calculation based on derivatives of the demand function.
  • Post 3 questions the calculation of the derivative Qd'(P) = 40, seeking clarification on how this value is derived.
  • Post 4 calculates the demand at a specific price and uses it to find the price elasticity and cross-price elasticity, inviting corrections on the calculations.
  • Post 5 reiterates the question about the derivative and suggests that understanding calculus is necessary for econometrics.
  • Post 6 expresses a need for more help in economics to improve understanding of the subject.
  • Post 7 suggests that the original question should be posted in a more appropriate forum for homework help.

Areas of Agreement / Disagreement

There is no consensus on the calculations presented, as participants are still discussing the methods and seeking clarification. Multiple viewpoints on the necessity of calculus knowledge for understanding the topic are also present.

Contextual Notes

Participants express varying levels of understanding of calculus and its application in economics, indicating a potential gap in foundational knowledge that may affect their ability to engage with the topic fully.

Who May Find This Useful

Students or individuals interested in economics, particularly those seeking assistance with elasticity calculations and the application of calculus in economic models.

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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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).
 
Last edited by a moderator:
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 ?
 
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
 
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.
 
Last edited by a moderator:
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 ~
 
Please post this in the approproiate Homework Help forum.
 

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