Business, 02.09.2021 17:50, 20jessicar598

A cereal company estimated the following function for the demand of its cereal:Q(x)=3-2.0P(x)+1.5(I)+.8P(y) -3.0P(m)+1.0A Where Qx is the sales of the cereal in millions of boxes, Px is the price of the cereal in
dollars, I is national income in trillions of dollars, Py is the price of the most similar
competitor cereal, PM is the price of milk, and A is the advertising expenditures of the
company, in hundreds of thousands of dollars.
This year, Px = $2, I = $4, Py = $2.50, PM = $1, and A = $2.
• Calculate the quantity of cereal sold by the company this year.
• Calculate the elasticity of sales with respect to each variable in the demand function.
• Estimate the level of sales next year if the company reduces Px by 10 percent and
increases advertising by 20 percent, I rises by 5 percent, Py is reduced by 10 percent,
and PM remains unchanged.
• By how much should the company change its advertising if it wants its sales to be 30
percent higher than this year?

PLEASE HELP WITH PART D

Answers: 3

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A cereal company estimated the following function for the demand of its cereal:Q(x)=3-2.0P(x)+1.5(I)...