Q) The research department of the Corn Flakes Corporation (CFC estimated the following regression for the demand of the corn flakes it sells:                                                                  Qd = 15,000 - 10 P + 1500 A + 4 P_x + 2 I

Where Q_d = sales of CFC corn flakes in millions of 10-ounce boxes per year.

P   = The price of CFC corn flakes in dollars per 10-ounce box

I    = Personal disposable income in trillions of dollars per year

P_x  = Price of competitive brand of corn flakes in dollars per 10-ounce box

A  = advertising expenditures on CFC corn flakes in hundreds of thousands of dollars per year.

                        This year, P = 7,000, I = 4,000, P_x = 8,000, and A = 54.         

Requirement:

(A) Calculate the sales of CFC corn flaxes this year.

(B) Calculate the elasticity of sales with respect to each variable in the demand function.

(C) Estimate the level of sales next year if the CFC reduces P by 10 percent, increases advertising by 20 percent, I rises by 5 percent, and P_x is reduced by 10 percent.