Suppose the Demand Function for the Toyota Camry Is Given

question 66

Essay

Suppose the demand function for the Toyota Camry is given by Q_d = 500 - 12P_C + 10P_H - 5P_G + 0.0001M,where P_C is the price of the Toyota Camry (in thousands),P_H is the price of the Honda Accord (in thousands),P_G is the price of gas (per gallon)and M is income.Further,suppose the supply curve for the Toyota Camry is given by Qs = 20P_C - 55.
a.What is the demand curve for the Toyota Camry if the price of the Accord is $25,000,gas is $2 per gallon and income is $50,000?
b.What is the equilibrium price and quantity in the market for Toyota Camrys?
c.Is demand elastic or inelastic at the equilibrium price?
d.What is the cross price elasticity of demand between Camrys and Accords at equilibrium?
e.What is the income elasticity of demand for Camrys at equilibrium?

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Definitions:

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