Question the demand for imported honda automobiles is given, Ask an Expert

Economics

Question: The demand for imported Honda automobiles is given by the following equation:

Q_H = 1200 - 20P_H + 10P_C + 200P_G

The price of Hondas, P_H = 60, the price of Chevrolets, P_C = 70, and the price of gasoline, P_G = 1.5.

(a) Calculate the point elasticity of demand for Hondas with respect to its own price, the price of Chevrolets, and the price of gasoline.

(b) For each of Chevrolets and gasoline, is it a substitute or complement for Hondas?

(d) If the cost per Honda is 50 and the Honda importing agency behaves as a monopolist, how many will be imported and at what price will they sell?

(e) Redo part (d) on the assumption gasoline price rises to P_G = 2.5.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M92586388

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