Estimate the level of sales

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Reference no: EM13735351

Qx=1.0-2.0Px+1.5I+0.8Py-3.0Pm+1.0A

Where Qx= sales of CFC cornflakes, in millions of 10-ounce boxex per year

Px= the price of CFC cornflakes, in dollars per 10-ounce box

I= personal disposable income, in trillions of dollars per year

Py= price of competitive brand of cornflakes, in dollars per 10-ounce box

Pm= price of milk, in dollars per quart

A= advertising expenditures of CFC cornflakes, in hundreds of thousands of dollars per year

This year, Px=$2, I=$4, Py=$2.50 , Pm=$1, A=$2

Questions

c) Estimate the level of sales next year if CFC reduces Px by 10 percent and increases advertising by 20 percent, Income rises by 5 percent, Py is reduced by 10 percent, and Pm remains unchanged.

(d) By how much should CFC change its advertising if it wants its sales to be 30 percent higher than this year?

Reference no: EM13735351

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