The marketing department of a firm that manufactures small vehicles has determined the following demandfunction for their cars. QV = 2,00,000 – 50PV + 75 PC + 0.4 I + 0.2A .If Pv = $10,000, Pc = $8,000, I = $25,000, and A = $300,000, then answer the following question:a) Identify the type of elasticity based on calculated values

The given function is QV = 2,00,000 – 50PV + 75 PC + 0.4 I + 0.2A.

First, let's substitute the given values into the equation:

QV = 2,00,000 – 50(10,000) + 75(8,000) + 0.4(25,000) + 0.2(300,000)

Solving this, we get:

QV = 2,00,000 – 500,000 + 600,000 + 10,000 + 60,000

QV = 370,000

The type of elasticity can be determined by the coefficients of the price variables in the demand function.

The coefficient of PV (price of the vehicle) is -50, which indicates that the quantity demanded decreases as the price of the vehicle increases. This is known as price elasticity of demand, and in this case, it is negative, indicating that the demand for the vehicles is elastic.

The coefficient of PC (price of competitor's vehicle) is 75, which indicates that the quantity demanded increases as the price of the competitor's vehicle increases. This is known as cross-price elasticity of demand, and in this case, it is positive, indicating that the vehicles are substitutes.

The coefficient of I (income) is 0.4, which indicates that the quantity demanded increases as income increases. This is known as income elasticity of demand, and in this case, it is positive, indicating that the vehicles are normal goods.

The coefficient of A (advertising expenditure) is 0.2, which indicates that the quantity demanded increases as advertising expenditure increases. This is known as advertising elasticity of demand, and in this case, it is positive, indicating that advertising has a positive effect on demand.