Question

1. Your company receives 40 excess copies of a book. You plan to sell these books in two markets: directly in the store or sell them on ebay. Here are the two demand equations:

Store Demand: P_S = 200 – 2Q_S PS =200–2QS

Ebay Demand: P_E = 250 – 5Q_E PE =250–5QE

If your goal is to maximize total revenue, how many books will you sell on ebay?

2. Assume Qx = 220 - 4Px + 3Po + 2.5Y. If Px = 150, Po =160, and Y = 120, what is the income elasticity?

Answer 1