# 215 determine the advertising elasticity of demand

• Notes
• 5
• 100% (1) 1 out of 1 people found this document helpful

This preview shows pages 3–5. Sign up to view the full content.

-2.15 Determine the advertising elasticity of demand. 1.05 What interpretation would you give to the exponent of N? Increase in 1% in population of 12 year old will increase the demand of the general cereal’s product by 3.70%. 6. The demand for haddock has been estimated as log Q = a + b log P + c log I + d log Pm where Q = quantity of haddock sold in New England P = price per pound of haddock I = a measure of personal income in the New England region Pm = an index of the price of meat and poultry If b = −2.174, c = 0.461, and d = 1.909,

This preview has intentionally blurred sections. Sign up to view the full version.

Myisha Coleman April 22, 2013 Determine the price elasticity of demand. -2.174 Determine the income elasticity of demand. 0.461 Determine the cross price elasticity of demand. 1.909 How would you characterize the demand for haddock? -2.175- the demand is elastic because it is more than 1 0.461=if income increased by1% its effect is minimum. 1.909=if price elasticity is 1.909 there will potentially be an effect on haddock. Suppose disposable income is expected to increase by 5 percent next year. Assuming all other factors remains constant, forecast the percentage change in the quantity of haddock demanded next year. If there is a 5% increase in income there will be a 2.305% change in quantity demanded
Myisha Coleman April 22, 2013 7. An estimate of the demand function for household furniture produced the following results: F = 0.0036Y1.08R0.16P −0.48 r2 = 0.996 where F = furniture expenditures per household Y = disposable personal income per household R = value of private residential construction per household P = ratio of the furniture price index to the consumer price index a. Determine the point price and income elasticities for household furniture. b. What interpretation would you give to the exponent for R? Why do you suppose R was included in the equation as a variable? c. If you were a supplier to the furniture manufacturer, would you have preferred to see the analysis performed in physical sales units rather than dollars of revenue? How would this change alter the interpretation of the price coefficient, presently estimated as −0.48?
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern