Business, 26.03.2021 09:40 skywil8981

. Empirical estimates suggest the following price elasticity of demand: 0.6 for Coca Cola; 4.0 for foreign vacation travel; and 0.2 for food. Using the determinants of price elasticity of demand, explain why each of these commodities would have these coefficients elasticity. C. JaneK Ghana Ltd., is the main sales agent of Infinix phones in Ghana. The economist of this enterprise has estimated the demand function for the firm's products per week to be of the form: QI = 445 – 2.5PI – 8I + 2.5PC where; QI is the quantity demanded of Infinix phones, PI is its own-price, PT is the price of a related good (Tecno Phones) and I is income. Given that PI = 10, PT = 5 and I = 40, use the above information to: i. Determine the quantity demanded of Infinix phones per week and compute the own-price elasticity of demand for Infinix phones and interpret your results. ii. Based on your answer in (i), what pricing policy would you recommend for the firm in order to maximize its total revenue? iii. Calculate the cross-price elasticity of demand between Infinix and Tecno phones, interpret your results and determine the kind of relationship that exists between the two. iv. Compute the income elasticity of demand and determine if Infinix phones are normal goods or not. Explain your results.

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