Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows:

Where,

Q_D = quantity purchased,

P_S = the price of smooth sailing sailboats,

P_X = the price of Company X's sailboat,

P_Y = 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.

a)Suppose that P_S = $9,000, P_X = $9,500, P_Y = $10,000, I = $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point.

b)Is elastic, inelastic, or unitary elastic in part (a)? Justify?

Globalization's fast pace around the world has helped people to adopt new trends and fashion at a higher rate as compared to the era with low level of FDI and trade. In Pakistan the growing concentration for Coffee cafes has opened new horizons for the investors to endow. If TYJ using the annual sales data of Gloria Jeans' estimated the demand function for their upcoming venture in coffee market, answer the following:

Q_C=10,000-20P_C

a)Derive the demand curve and explain the relationship between demand and price.

b)If TYJ wishes to sell 5,000 cups of coffee a day, find the price for selling the same.

c)Suppose if the price is determined at 350 identify the quantity TYJ would be able to sell.

d)Suppose Espresso increases its price for per cup of coffee, illustrate and explain the impact it might create on the demand of coffee provided by TYJ.

Calculating the risk, help TYJ identify at what price the demand for coffee would fall to zero. Also, explain in your opinion the demand of coffee is elastic or inelastic?