Math Solutions

Solution: General Cereals is using a regression model to estimate the demand for Tweetie Sweeties, a whistle-shaped, sugar-coated breakfast cereal for

Question: 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:

\[Q_{D}=6,280 P^{-2.15} A^{1.05} N^{3.70}\]

where \(Q_{D}=\) quantity demanded, in \(10 \mathrm{oz}\). boxes \(P=\) price per box, in dollars \(A=\) advertising expenditures on daytime television, in dollars \(N=\) proportion of the population under 12 years old

  1. Determine the point price elasticity of demand for Tweetie Sweeties.
  2. Determine the advertising elasticity of demand.
  3. What interpretation would you give to the exponent of \(N\) ?

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