Assume you are the manager of Wenstrom Brewing Company (WBC) and you face the following demand...

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Economics

Assume you are the manager of Wenstrom Brewing Company (WBC) andyou face the following demand for your beer: QWBC = 12 - 3PWBC +4PPBR. Suppose you sell your beer for $3.00 per bottle and PBRsells for $1.50 per bottle.
a. Is PBR a substitute or a complement? Explain. b. Calculatethe cross-price elasticity of demand between WBC and PBR at thegiven prices. c. If you want to increase the level of beer you sellby 15%, how much should you change the price? Is this a good idea?Explain. d. Does your answer to part c change if the price of WBCwere $2.50 per bottle? Explain. e. If advertising was included inthe demand equation and the advertising elasticity was calculatedto be 2, how much would consumption of your beer change if youincreased the level of advertising by 4%?

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Given QWBC123PWBC4PPBR PWBC3 PPBR150 a Coefficient of PPBR is positive it means that PBR is a substitute b QWBC123PWBC4PPBR First we calculate QWBC at given prices QWBC123341509 units Differentiate QWBC by dPPBR we get dQWBCdPPBR4 Cross price elasticity of demanddQWBCdPPBRPPBRQWBC41509067 c We need to See Answer

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