Finance 30210 Quiz #5 Name__________________________ Section_________ 1)Suppose that you have the following demand curve: IPQ02.ln35.5.8ln+−=Pis the current price and Iis average income in thousands. Assume that average income is equal to $80,000 and that the current price is $45. a)Calculate the current price elasticity and income elasticity. ()6.18002.02.ln%%35.lnln%%===∆∆=∆∆=−=∆∆=∆∆=IIIQIQPQPQIPεεb)Suppose that average income rises by 15%. You decide that want to raise your price by 20%. What impact will this have on your sales (percentage)? IPQIp∆+∆=∆%%%εε()()()()%17156.12035.%=+−=∆Qc)By how much could you raise (percentage) your price and maintain your current sale
has intentionally blurred sections.
Sign up to view the full version.