Question
In: Economics
In a 6-brand simulation model used to evaluate the effects of price increases of one brand...
In a 6-brand simulation model used to evaluate the effects of price increases of one brand on the shares of rival brands of luxury automobiles, how many own-price and cross-price elasticities would be estimated?
a. 5 own-price elasticities, 16 cross-price elasticities
b. 6 own-price elasticities and 30 cross-price elasticities
c. 6 own-price elasticities and 12 cross-price elasticities
d. 6 own-price elasticities and 36 cross-price elasticities
Solutions
Expert Solution
Since there are 6 brands, there is going to be 6 own price elasticity, one for each.
The cross price elasticity is calculated for 2 goods at a time. Hence total number of cross price elasticity=6*5=30.
Hence the correct option is
b. 6 own-price elasticities and 30 cross-price elasticities
Rahul Sunny answered 2 years agoRelated Solutions
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The following data show the brand, price ($), and the overall
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ambient noise reduction. Scores range from 0 (lowest) to 100
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The following data show the brand, price ($), and the overall score for 6 stereo headphones...
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score for 6 stereo headphones that were tested by Consumer
Reports. The overall score is based on sound quality and
effectiveness of ambient noise reduction. Scores range from 0
(lowest) to 100 (highest). The estimated regression equation for
these data is = 23.395 + 0.316 x, where
x = price ($) and y = overall score.
Brand
Price ($)
Score
Bose
180
75
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95
61
Phillips/O'Neill...
The following data show the brand, price ($), and the overall score for 6 stereo headphones...
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score for 6 stereo headphones that were tested by Consumer
Reports. The overall score is based on sound quality and
effectiveness of ambient noise reduction. Scores range from 0
(lowest) to 100 (highest). The estimated regression equation for
these data is = 20.397 + 0.346 x, where
x = price ($) and y = overall score.
Brand
Price ($)
Score
Bose
170
75
Scullcandy
150
72
Koss
95
62
Phillips/O'Neill...
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