(Answered) The demand for joys new high-alcohol content beer has

Economics

The demand for Joy's new high-alcohol content beer has enjoyed rapid growth recently. From the analysis of Joy's various outlets, it was found that the demand curve follows this pattern:

Q_J = 150 - 200 P_J - 100 P_C + 10 T - 150 A_C + 250 A_J where Q_J= the number of beers served per week

P_J = the price of Joy's new high-alcohol content beer

P_C = Average price of the competition

T = Average outdoor temperature (measured in ya-ba-da-ba-doo degrees)

A_C = Monthly Advertising expenditures (in units) by the competition

A_J = Monthly Advertising expenditures (in units) by Joy's outlets

Currently P_J = 7.00, P_C = 6.00, T = 35, A_C = 10, and A_J = 20.

1. Should P_J be increased or decreased to maximize revenue? How do you know?

2. Calculate the elasticity of demand for Joy's beer with respect to P_C, T, and A_C.

3. Calculate the price range over which the demand for Joy's beer is price elastic.

4. If the cost per beer is 5 and Joy's behaves as a monopolist, how many beers will be sold and at what price?

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M91868827
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