demand of the corn flakes it sells; Qx=1.0 -2.0 Px+1.5 I+0.8 Py-3.0 Pm+1.0 A Qx is the sales of CFC corn flakes in millions of 10 ounces boxes per year, Px is the price of CFC cornflakes in dollars per 10 ounces boxes, I is personal income in trillions of dollars per year, Py is the price of competitors brand cornflakes in dollars per 10 ounces boxes, Pm is the price of milk in dollars per quart and A is the advertising expenditure of CFC cornflakes in hundreds of thousands of dollars per year; This year Px=$2.0, I=$4, Py=$2.50, Pm=$1.0 and A=$2.0, Then find the following; A) Calculate the sales of CFC corn flakes for this year. B) Calculate the elasticity with respect to each variable in demand function. C) Estimate the level of sales next year if CFC reduces its price (Px) by 10 percent, increases advertisement expenditure (A) by 20 percent, income (I) rises by 5 percent, price of competitors brand (Py) is reduced by 10 percent, and price of milk (Pm) remains unchanged?
Equations and Inequations
Equations and inequalities describe the relationship between two mathematical expressions.
Linear Functions
A linear function can just be a constant, or it can be the constant multiplied with the variable like x or y. If the variables are of the form, x2, x1/2 or y2 it is not linear. The exponent over the variables should always be 1.
demand of the corn flakes it sells;
Qx=1.0 -2.0 Px+1.5 I+0.8 Py-3.0 Pm+1.0 A
Qx is the sales of CFC corn flakes in millions of 10 ounces boxes per year, Px is the price of CFC cornflakes in dollars per 10 ounces boxes, I is personal income in trillions of dollars per year, Py is the price of competitors brand cornflakes in dollars per 10 ounces boxes, Pm is the price of milk in dollars per quart and A is the advertising expenditure of CFC cornflakes in hundreds of thousands of dollars per year;
This year Px=$2.0, I=$4, Py=$2.50, Pm=$1.0 and A=$2.0, Then find the following;
A) Calculate the sales of CFC corn flakes for this year.
B) Calculate the elasticity with respect to each variable in demand function.
C) Estimate the level of sales next year if CFC reduces its price (Px) by 10 percent, increases advertisement expenditure (A) by 20 percent, income (I) rises by 5 percent, price of competitors brand (Py) is reduced by 10 percent, and price of milk (Pm) remains unchanged?
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