Initial-values are: PM = 520000 Pr; = $1.00 I = $15000 A = $10000 This function is: Q: = 100 .01PT +.005P1u 10Pg +.0lI +.003A l.{a:|. Use the above to calculate the are price elasticity of dede between Pr = $30000 decreasing to Pr = $10000. d P + The arc elasticity formula is:Ep = I: l {21:3 J. E {b}. Judging 'om the computation in {la}, do you expect the revenue resulting 'om the price decrease to 510000 to increase= remain the same= or decrease relative to the revenue at the price of $20 000Cr {Hmt see the table on page 155 of Truett]. Explain your choice. lam the point price elasticity of demand for Toyotas at PT= 520000 [which should make CT = 210}. Other variables and their values are given at the top, before question #1. The formula is: 502' PT E = I p 3P]? 01' {11). Does this elasticity indicate that Toyota demand is relativelyr responsive to changes in Toyota price\"? Explain why or why not. 3.{a:|. Calculate the point gasoline crossprice elasticity between {Po} and Toyota demand {QT}. Assume the price of gasoline is_E1: = $1.00. L'se Pr = 30000 {which should make QT = 2'30). Ctber variables and their values are given at the top: before question ill. The formula is: 301' _ P_c 313s 02' ETC _ {b}. Does this elasticity indicate that the demand for Toyotas is relatively responsive to changes in the price of gasoline -|:P-::1}J'Fi Explain 1r-vhy or why not. 4.{a:|. Competition might be a worry for Toyota. PM = the price of W. Calculate the point W cross-price elasticity ofdemand with PM = 320000 and Pr = $20000 {which should make CT = 270]. Other variables are given at the top before question #1. The formula is: 012% Pm apm QT Era; = {b}. Does this elasticity indicate that the demand for Toyotas is relatively responsive to changes in the price of Was? Explain why or why not. f.{a:|. Calculate the point advertising elasticity ofdemand for advertising expenditures {A} = $10000 also vvith PT= $10000 (which should make QF 370]. Other variables and their values are given at the top: before question #1. The formula is: _0QT A 'aa or {b}. Does this elasticity indicate that demand for Toyotas is very responsive to changes in advertising expenditures [thus suggesting that advertising is a very important vvay to increase sale s)? Explain why or why not. Ea