Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Question
Chapter 4, Problem 5E
(a)
To determine
The point price
(b)
To determine
Advertising elasticity of demand.
(c)
To determine
Interpretation of the exponent N.
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General Cereals is using a regression model to estimate the demand for Tweetie Sweeties, a whistle-shaped, sugar-coated breakfast cereal for
children. The following (multiplicative exponential) demand function is being used:
QD= 6,280 P 1.35) 42.05 N 2.70
where
QD quantity demanded, in 10-oz boxes
P = price per box, in dollars
A = advertising expenditures on daytime television, in dollars
N = proportion of the population under 12 years old, in percent
What is the point price elasticity of demand for Tweetie Sweeties?
O 2.70
O 2.05
-0.66
-1.35
What is the advertising elasticity of demand?
-1.35
O 2.70
O 0.76
O 2.05
According to the estimated model, a percent increase in the proportion of the population under 12 years old
by percent.
the quantity demanded
General Cereals is using a regression model to estimate the demand for Tweetie Sweeties, a whistle-shaped, sugar-coated breakfast cereal for children. The following (multiplicative exponential) demand function is being used:
QD=6,280 P(−1.85)A2.05N2.70QD=6,280 P−1.85A2.05N2.70
where
QDQD = quantity demanded, in 10-oz boxes
PP = price per box, in dollars
AA = advertising expenditures on daytime television, in dollars
NN = proportion of the population under 12 years old, in percent
What is the point price elasticity of demand for Tweetie Sweeties?
2.05
2.70
-0.90
-1.85
What is the advertising elasticity of demand?
0.76
-1.85
2.70
2.05
General Cereals is using a regression model to estimate the demand for Tweetie Sweeties, a whistle-shaped, sugar-coated breakfast cereal for
children. The following (multiplicative exponential) demand function is being used:
QD = 6,280 P(-2.15) A1.75N2.70
where
QD = quantity demanded, in 10-oz boxes
P = price per box, in dollars
A = advertising expenditures on daytime television, in dollars
N = proportion of the population under 12 years old, in percent
What is the point price elasticity of demand for Tweetie Sweeties?
1.75
-1.23
2.70
-2.15
What is the advertising elasticity of demand?
0.65
1.75
-2.15
2.70
According to the estimated model, a percent increase in the proportion of the population under 12 years old
by
percent.
the quantity demanded
Chapter 4 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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