Economics Demand Interpretaton & Deluxe Microwave Ovens

SDSU Economics Demand Interpretaton & Deluxe Microwave Ovens Questions

EMAND INTERPRETATON EXERCISE

Analyze the demand function for Cuisine Tech Inc.’s (CTI) deluxe microwave ovens given on page 170 of the text. Please also read “What is a Symbol” located in the folder with this assignment. This function is: QH = 60000 - 40PH + 20PC + 5H + .1IH + .0001AH

1. Characterize this function by circling all in the following list that are applicable: univariate, bivariate, multivariate, linear, exponential, logarithmic, curvilinear, 1 st degree, 2nd degree, 3rd degree, additive, multiplicative, linearly homogeneous

2. What is the numerical value of the partial derivative of the function with respect to the number of two-income households (H) (be sure to also include the + or – sign; the value is already expressed in millions. Note: I do not want the symbol for this partial derivative)?

3. Write the mathematical symbol representing the coefficient of the price of competing-brand (PC) ovens. (the numerical value of this coefficient is +20, but the answer you give is to be the symbol representing this partial derivative).

4. Assuming there is a $100 increase in the price (PC) competing-brand ovens, what change in CTI’s demand (QH) will result (an increase or decrease and also give the numerical value, too)?

5. Assuming the number of two-income households (H, in millions) employed decreases by 10 households, what change in CTI’s demand (QH) will result (an increase or decrease and also give the numerical value, too)?

6. Are competing-brand ovens substitutes for or complements to CTI ovens? What feature of the function tells you?

7. Are CTI ovens normal or inferior goods? What feature of the function tells you?

8. Assuming your advertising budget (A) is increased by $6000, what change in CTI’s demand (QH) will result (an increase or decrease and also give the numerical value, too)?

9. Assuming the competition announces a price decrease (PC) of $200 for each of its microwave ovens, what change in CTI demand (QH )is indicated (an increase or decrease and also give the numerical value of it, too)?

10. Data indicates that the average annual family income (IH) of families thought to be your customers increased by $2000, what change in CTI’s demand (QH) will result (an increase or decrease and also give the numerical value, of it too)? DemandInterp3.docx 09182021