Suppose we have the following hypothetical demand function


Qx = 600 - 3px + 0.04I - 2pz

Where Px = $ 70, Pz = 68, I = $ 24,000 (disposable income per capita)


a. Interpret in words the meaning of the coefficient of the variable I

b. How can we classify products X and Z

c. What is the reduced demand function

d. What is the demand equation

e. Given the current prices and income per capita, determine the expected sales

f. The price of product X, Px = 70, Calculate the price point elasticity of demand

g. Given your answer in the f, we can classify as elastic or inelastic demand

h. If we increase the price impact will 3% increase in total revenues of product X