Chapter Two Revenue of the Firm 83 ice elasticity of with the values c. Find the arc cross elasticity of demand for Toyotas and Mazdas between PM = $20,000 and PM = $22,000. (All other figures except PT remain the same as in cut, does total part (a).) d. Are Toyotas and Mazdas substitutes or complements? Why? he other vari C5. Paradise Lake, Inc., is a developer of mobile-home lots. Through statistical at does it say research, Paradise Lake has estimated the annual demand function for its lots to be as follows: duct is repre- QL = 3,536 - 0.5PL + 0.2Pc + 0.0081 + 0.0001A, old per week where Ipha's 21 = the number of Paradise Lake's lots purchased per year, PL = the price of a Paradise Lake lot, Pc = the price of a competing land company's lots , I = average annual household income, and can obtain A = the annual amount spent by Paradise Lake on advertising. in how you a. Find the income elasticity of demand for Paradise Lake's lots where PL = when Q = $10,000, Pc = $8,000, I = $45,000, and A = $40,000. know? b. Are these lots a normal good or an inferior good? Why? tween Q= c. What does your answer in part a tell Paradise Lake about the demand for its happen to lots? at price to d. Find the price elasticity of demand for Paradise Lake's properties at the same point as in part (a). ealer is as e. Is the price elasticity of demand for Paradise Lake's properties elastic, inelas- tic, or unitary elastic? How do you know? C6. Smooth Sailing, Inc., has estimated the demand function for its sailboats (quan- tity purchased annually) as follows: Qs = 89,830 - 40PS + 20P + 15Py + 21 + 0.001A + 10W, where es = quantity purchased, Ps = the price of Smooth Sailing sailboats, Px = the price of Company X's sailboat, Py = the price of Company Y's motorboat , I = per capita income in dollars, A = dollars spent on advertising, and W = number of favorable days of weather in the southern region of the United States.DEMAND INTERPRETATON EXERCISE Analyze the demand function for Smooth Sailing sailboats given on page 83. Please also read "What is a Symbol" located in the folder with this assignment. This function is Qs = 89830 -40Ps +20Px +15PY +21 +.001A +10W 1. Characterize this function by circling all in the following list that are applicable: univariate, bivariate, multivariate, linear, exponential, logarithmic, curvilinear, 1st degree, 2nd degree, 3rd degree, additive, multiplicative, linearly homogeneous 2. What is the numerical value of the partial derivative of the function with respect the price of Company Y's motorboats (PY) (be sure to also include the + or - sign. Note: I do not want the symbol for this partial derivative)? 3. Write the mathematical symbol representing the coefficient of the number of favorable weather days (W). (the numerical value of this coefficient is +10, but the answer you give is to be the symbol representing this partial derivative). 4. Assuming there is a 100 day increase in the number of favorable weather days (W), what change in demand for Smooth Sailing's sailboats Qs will result (an increase or decrease and also give the numerical value of it too)? 5. Are Y's motorboats a substitute for or complementary to Smooth Sailing sailboats? What feature of the function tells you? 6. Are Smooth Sailing sailboats a normal or an inferior good? What feature of the function tells you? 7. Assuming the price of Y's motorboats increases by $300, what change in demand for Smooth Sailing's sailboats Qs will result (an increase or decrease and also give the numerical value, too)? 8. Assuming per capita income (1) decreases by $1000, what change in demand for Smooth Sailing's sailboats Qs will result (an increase or decrease and also give the numerical value of it, too)? 9. Assuming the price of X's sailboats (Px) increases by $100, what change in demand for Smooth Sailing's sailboats Qs will result (an increase or decrease and also give the numerical value of it, too)? 10. Assuming the advertising expenditures on Smooth Sailing's sailboats (A) decreases by $3000, what change in demand for Smooth Sailing's sailboats Qs will result (an increase or decrease and also give the numerical value of it, too)? DemandInterp 7.docx 09192021