Managerial Economics: Applications, Strategy and Tactics 12th Edition by James McGuigan, Charles Moyer, Frederick Harris

Exercise 5

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:
QD = 6,280P 2.1 5A 1.05 N 3.70
where QD = quantity demanded, in 10 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
a. Determine the point price elasticity of demand for Tweetie Sweeties.
b. Determine the advertising elasticity of demand.
c. What interpretation would you give to the exponent of N