The demand function for compact Hertz rental cars at Bostons Logan Airport has been esti mated, using
Question:
The demand function for compact Hertz rental cars at Boston’s Logan Airport has been esti¬ mated, using regression analysis, to be
where
(a) What are the cross elasticities of demand between Hertz’s compact cars and the other cars, and what do these figures indicate?
(b) Derive an expression for the demand curve for Hertz s compact cars.
(c) What is the sales-revenue-maximizing price (daily rate) for the Hertz compact car?
(d) At that price, what range of sales volumes can be expected at the 95 percent confidence limits?
(e) Outline all the assumptions and qualifications which underlie your sales predictions.
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