General Cereals is using a regression model to estimate the demand for Tweetie Sweeties, a whistle-shaped, sugar-coated breakfast cereal forchildren. The following (multiplicative exponential) demand function is being used:QD -6,280 P-1.85) 42.05 №2.70whereQD quantity demanded, in 10-oz boxesP = price per box, in dollarsA = advertising expenditures on daytime television, in dollarsN = proportion of the population under 12 years old, in percentWhat is the point price elasticity of demand for Tweetie Sweeties?2.70-0.902.05-1.85What is the advertising elasticity of demand?2.700.762.05-1.85According to the estimated model, a percent increase in the proportion of the population under 12 years oldbypercent.the quantity demanded

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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:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 7E

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A store that sells maize meal discovers that when the price of 1kg maize meal is R24 per kilogram, the quantity demanded is 306 kgs per week. When the price decreases to R21 per kg, then the sales increase to 340kgs per week. Use this information to answer questions 3.1.1 and 3.1.2 below: 3.1.1. Determine the price elasticity of maize meal using the arc method (5) 3.1.2 Discuss the relationship between the price elasticity of maize meal and the total revenue the store received from the sales. Advise the store on an appropriate pricing strategy.
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Following the increase in price of a 250g bag of coffee from £2.35 to £2.65 in a local supermarket, weekly sales of tea increase from 8.5 kg to 11.5 kg. From this we can conclude that: a) The price elasticity of demand for tea is -2.76, so that consumer’ demand for tea is highly elastic. b) The income elasticity of demand among consumers is 10, confirming that tea, but not coffee, is a luxury good. c) The cross-price elasticity of demand is 2.5, confirming that tea is a substitute for coffee. d) The price elasticity of demand for coffee is -0.4, so that the demand for coffee is price inelastic.
QUESTION 7 28 C 24 20 16 12 8 4 0 4 8 O a) 1 Ob)-3 Oc)-11 Od) 17/3 O e) 2/11 Of)-2/21 Og) - 3/15.5 Oh)-3/1.5 12 16 20 E 07. Using the midpoint basis, and expressing the answer in fraction or integer format, calculate the elasticity statistic for the responsiveness of E to C changing from 2 to 6
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Demand Curves. The Eastern Shuttle, Inc., is a regional airline providing shuttle service between New York and Washington, DC. An analysis of the monthly demand for service has revealed the following demand relation Q = 26,000 - 500P - 250POG + 200IB - 5,000S where Q is quantity measured by the number of passengers per month, P is the price ($), POG is a regional price index for other consumer goods (1967 = 100), IB is an index of business activity, and S, a binary or dummy variable, equals 1 in summer months and 0 otherwise. A. Determine the demand curve facing the airline during the winter month of January if POG = 4 and IB = 250. B. Determine the demand curve facing the airline, quantity demanded, and total revenues during the summer month of July if P = $100 and all other price-related and business activity variables are as specified previously.

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