· -ILNorrmalJ1NoSpa. Heading 1 Title Subtitle Paragraph Styles DEMAND INTERPRETA
ID: 2440498 • Letter: #
Question
· -ILNorrmalJ1NoSpa. Heading 1 Title Subtitle Paragraph Styles DEMAND INTERPRETATON EXERCISE Name Due Analyze the demand function for Smooth Sailing sailbeats given on page 83. Please also read "What is a Symbol located in the folder with this assignment 1. Characterize this fuaction by circling all in the following list that ace applicable: anivariate, bivariate, multivariate, linear, esxposeatial, logarithmic, curvilinear, 1" degree, 2al degree, 3M degree, additive, multiplicative, linearly boanogeneous function with respect the price ofSmooth sailing's sailboats (be sare to also include the + or-sign. Note: I do not want the syabol for this partial derivative)? 2. what is the nuanencalvalue of the partial derivative of t 3. Write the mathematical gabol tepresenting the coefficient of per capita income. (the numerical value of this coefficient is +2, but the answer you give is to be the axmbol representing this partial derivative). 4 Assuming the price of Y's motorboats decreases by $300 what change in demand for Smooth Sailing's sailboats will result (eive the numerical value, too)? 5. Assuming the price of Xe's sailboatreaes by $200, wbat change in demsand for Sanooth Sailing's ailboats will resalt (givie the numetical value of it, too)?Explanation / Answer
1. multivariate, linear, 1st degree, addictive
There are more than 3 variables which affect Quantity purchased. It is linear function because there is no exponential in the given function.
2. dQs/dPs = - 40
3. dQs/dI = + 2
4. Qs = 89830 - 40Ps + 20Px + 15Py + 2I + 0.001A + 10W
Qs' = 89830 - 40Ps + 20Px + 15(Py - 300) + 2I + 0.001A + 10W
Qs' = 89830 - 40Ps + 20Px + 15Py - 4500 + 2I + 0.001A + 10W
Qs' = Qs - 4500
Demand decreases by 4500 units.
5. Qs = 89830 - 40Ps + 20Px + 15Py + 2I + 0.001A + 10W
Qs' = 89830 - 40Ps + 20(Px + 200) + 15Py + 2I + 0.001A + 10W
Qs' = 89830 - 40Ps + 20Px + 4000 + 15Py + 2I + 0.001A + 10W
Qs' = Qs + 4000
Demand increases by 4000 units.
6. Qs = + 20Px
Substitute goods because increase in price of X i.e. Px causes increase in Qs.
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