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The estimated demand function for Toyota cars is shown below: Q =75 -0.3P + 0.4A + 1.4Y - 6PA Where: Q = Quantity demanded for
The estimated demand function for Toyota cars is shown below: Q =75 -0.3P + 0.4A + 1.4Y - 6PA Where: Q = Quantity demanded for Toyota cars P = Price of Toyota Car ($) A = Advertising expenditure ('000) PA = Price of Product A ($) Y = Income ('000) 1. What does the size and sign of the coefficients for price, income, advertising expenditur and price of product A in the equation indicate about the effect of changes in thes variables on the quantity demanded of Toyota cars? ii . Given the following information, A= $40,000, PA = 20 and Y = 15,000, derive th demand equation for Toyota cars in the inverse form. iii. Based on information on price of Toyota car and total revenue given in the table below. what can you conclude about the price elasticity of demand ? Justify your answer. Support your answer with a graph. Price Total Revenue $75,000 14.445 $85,000 11,455 In your opinion, what are the determinants of supply for cars? (Hint: Your answer can be sourced from outside the case study. However, you must cite your source. Provide four (4) discussion points for this question)
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