Question: The maker of a leading brand of low-calorie microwavable food estimated the following demand equation for its product using data from 26 supermarkets around the country for the month of April:

Assume the following values for the independent variables:

Q = Quantity sold per month

P (in cents) = Price of the product = 500

Px (in cents) = Price of leading competitor’s product = 600

I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarket is located = 5,500

A (in dollars) = Monthly advertising expenditure = 10,000

M = Number of microwave ovens sold in the SMSA in which the supermarket is located = 5,000

Compute the income elasticity.

Price: $2.99

Solution: The downloadable solution consists of 1 pages
Deliverable: Word Document